FinTech

The Changing FinTech Landscape

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4 FINTECH M&A OVERVIEW After record-breaking years in 2018 and 2019, M&A activity in the FinTech sector slowed in 2020 as the COVID-19 pandemic roiled the financial markets. In spite of difficult economic conditions, a number of major deals were completed. Some of the most notable transactions announced in 2020 were in the payments space, with Worldline's $8.6 billion acquisition of Ingenico and Nexi's $17.8 billion merger with SIA and subsequent $9.2 billion acquisition of Nets. Intuit's $7 billion acquisition of Credit Karma and American Express' acquisition of FinTech lender Kabbage are other high-profile examples of leading financial services companies leveraging M&A deals to make inroads in the FinTech sector. In addition to its impact on the economy and financial markets, the COVID-19 pandemic forced a dramatic change in the way that most consumers access financial services. The explosive growth in consumer adoption of mobile payments, banking, insurance, and investment services has made consolidation in the FinTech sector inevitable, as traditional banks and service providers race to acquire or partner with technology companies to meet their customers' needs. The growth in mobile payment options will also be rich for M&A as banks enhance their mobile platforms or offer transactions in digital currencies. FinTechs themselves will also be a source for M&A as the sector expands. Coupled with record low interest rates, healthy venture capital flows, and a sizzling SPAC market in the early part of the year, 2021 is already a watershed year for M&A activity in the FinTech sector. Indeed, the first half of 2021 has seen a flurry of primarily U.S.-based M&A activity, from credit reporting agency Equifax Inc.'s $640 million deal to buy anti-fraud specialist Kount Inc. to NCR Corp.'s $1.84 billion announced merger with ATM network operator Cardtronics. Research from S&P Global Market Intelligence shows that the average deal volume in the first half of 2021 was higher than the average in 2020. As the FinTech industry rapidly matures, our forecast for the remainder of 2021 and 2022 sees a wave of consolidation on the horizon.

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