Mobile Payments a Major Part of Growing Fintech M&A Market

October 10, 2018         By: Steven Anderson

Are you thinking that there’s been a lot of action in mergers and acquisitions (M&A) in the financial technology (fintech) space lately? If you’ve been thinking that, then you’re not alone. Not by a long shot. We’ve noticed that same development lately, and Hampleton Partners sent a report out our way that solidified our perceptions. There really has been a lot of action in fintech M&A lately.

The report noted that there was a combined total of 141 transactions in just the first six months of 2018, which together represented a total of $39.3 billion in activity. That was up better than 26 percent from the preceding half-year period, the report noted.

Several factors drove that development. Perhaps the biggest was the growth of digital banking. As both consumer-level and enterprise-level customers start taking the concept of a branchless bank seriously—or at least incorporating some mobile moves into the normal branch bank operation—that’s prompted some serious growth.

This is especially true of a number of challenger banks cropping up throughout Europe. These firms are actively pushing the envelope in growth, pursuing software companies to upgrade their infrastructure. One key example of this development was FreeAgent, a Scottish accounting software operation that was bought outright by the Royal Bank of Scotland.

Joining in the fray are some higher-priced transactions; when Blackstone acquired Thomson Reuters, it shelled out fully $17 billion for the privilege, a move that ramped up the total average value of acquisitions substantially.

Granted, the sheer number and size of the M&A field in fintech has been substantial lately, but look at all the developments we’ve seen crop up and that are likely to start growing even in the near-term. We’ve seen biometrics on a tear, the digital-only bank, blockchain is roaring past its original use in cryptocurrency…there’s so much going on here that it would be more surprising to not see a lot of M&A activity.

There are too many sub-fields for fintech not to see active growth in M&A, because with so many fields, that means a lot of competition. With a heavily-competed field, it’s not surprising to see a lot of firms pursue market share. Many fail, some look for new advantages, and that adds up to brisk business in M&A.