The Rise of Fintech M&A

You may have seen or heard about the latest buzzword for a phenomenon currently causing ripples in the M&A world: Fintech. A contraction of ‘financial technology’, Fintech is shorthand for financially innovative companies, usually start-ups, utilising technology to help make financial services more efficient. It is a growing sector and expected to reach around £5.55 billion by 2018, with firms in Europe experiencing the highest growth. Fintech firms offer a range of financial services including loans, currency exchange and payments, as well as portfolio and wealth management.

As the Fintech market matures, it is expected that there will be an increase in already buoyant M&A activity.

Recent Fintech M&A deals include:

Fidelity National Information Systems (FIS) acquisition of SunGard Data Systems for £6.31 billion

SunGard is one of the world’s leading financial software and technology services companies, providing software to asset managers, private equity firms, banks and insurance companies. In 2015 it was acquired by FIS, a firm that provides banking and payment technology together with outsourcing and consulting solutions. FIS acquired the company in order to broaden its range of enterprise banking and capital markets capabilities, which will ultimately enhance the worldwide financial industries.

Optimal payments acquired by Skrill for £0.83 billion

In a move expected to take Optimal into the FTSE 250, the online payment company acquired Skrill, a provider of pre-paid online vouchers. This deal will enable Optimal to gain more exposure in the online gaming sector, which itself is expected to be worth almost £38 billion by 2018. Optimal’s acquisition of Skrill forms part of a strategy to realise its long-term goal of becoming the market leader in the online and mobile payment sector.

Procserve acquired by Basware for £18.72 million

Finnish enterprise software provider, Basware, acquired the business of one of its British rivals, Procserve, a market leader in public sector e-procurement and most commonly known for e-invoicing and purchase-to-pay solutions. Basware says the acquisition will provide Government bodies with better cash flow transparency, something the company claims will improve public services.

With technology advancing at an astonishing rate, the use of smartphones has necessitated innovative solutions for online payments. Start-ups working in this area are leveraging technology to increase the relevance and convenience of customer delivery systems, particularly among young people who typically have a distrust of traditional banks and their methods. As a result, Fintech M&A deals are expected to grow in line with the ever-advancing technological aspirations and awareness of millennials.

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