2022_Fintech M&A Insights

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13 The Changing FinTech Landscape: A Snapshot of M&A Themes and Trends Acquirers and investors need to understand a target's existing "compliance culture" and its ability to adapt to more onerous regulatory requirements. An important task, as part of a larger due diligence effort, is to understand how a FinTech is tracking and complying with all of the rules and regulations to which it is subject. This goes beyond merely assessing whether it is in "good standing" in the jurisdictions where it operates. There needs to be an understanding of how the FinTech views compliance as part of its overall business, and how products and services are reviewed for legal and regulatory compliance. Acquirers and investors also should examine how the FinTech is preparing for new laws and regulations that could undermine its business prospects and growth trajectory. In both the near term and long term, the FinTech sector should expect more regulatory scrutiny over, as well as legislative interest in, consumer protection and financial inclusion matters, operational resiliency, and the financial stability risks posed by non-bank financial intermediation. As a diligence matter, acquirers and investors should have a good handle as to how the target is not only scalable for future growth but adaptable for new or heightened regulatory pressures. ASSESSING "COMPLIANCE CULTURE" AND ADAPTING TO A MORE ONEROUS REGULATORY ENVIRONMENT

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