Fintech Alliances and Partnerships Temper M&A: Analysis

By MergerMarket

Commercial partnerships between fintech players and banks, as well as being struck purely between fintechs, has in some quarters shifted slight attention from mergers and acquisitions.

Technology-enabled companies find that partnerships allow them to reach new customers faster and cheaper than M&A, without losing any of their autonomy, according to industry experts. Drill this down further specifically to the financial services space and partnerships among tech companies make further sense because they allow such players to access a broader base of clients, a sector banker said, adding that an acquisition cost per client is far less expensive when reached via partnerships compared to M&A.

Throughout 2018, technology M&A accounted for 15% of the USD 3.6tn worth of deals conducted globally, according to Mergermarket data. This has risen throughout the last decade as IT spans almost every facet and sector of business.

Technology has become an inescapable science, assisting how daily routines are undertaken and more specifically, how business is conducted.

And fintech has become a cornerstone of this latest tech boon. Yet those service providers that make up a significant element of the fintech sphere are often more inclined to find alternative paths to M&A as an avenue to expand.

Cost is not the only driver behind this thinking. Fintech players tend to specialize in niche products. Diversifying their offering and services through product partnerships has become more commonplace. New products help fintech companies reach new clients.

Read more here.

03 May 2019

Tagged in: fintech, insurtech, M&A, partnership, technology, trends

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