Issue link: https://digital.shearman.com/i/1394543
Financial technology—or "FinTech"—is redefining the manner and pace in which financial products and services are delivered. The COVID-19 pandemic, in particular, has accelerated demand for digital products and services in fundamental ways and put in sharp relief the extent to which FinTech presents challenges and opportunities for traditional banks. The growth of FinTech has been cited as among the enormous competitive threats facing banks, with many traditional banking products and services, from payments to lending, increasingly moving out of the banking system. As one bank executive has described, the competitive threat posed by FinTech is "everywhere," and FinTechs' "ability to merge social media, use data smartly and integrate with other platforms rapidly (often without the disadvantages of being an actual bank) will help these companies win significant market share." It is against this backdrop that Shearman & Sterling LLP and S&P Global Market Intelligence teamed up to produce this report on the prospect for greater consolidation and investment in the FinTech sector. From our respective vantage points, established players are increasingly evaluating investments or acquisitions involving FinTechs, and venture capital and private equity investors are eying the FinTech sector with greater intensity. The purpose of this report is to provide an overview of FinTech deal activity, discuss its drivers, and offer insights into how financial institutions, FinTechs, and investors can prepare for transactions this year. INTRODUCTION Attorney Advertising. This memorandum is intended only as a general discussion of these issues. It should not be regarded as legal advice. We would be pleased to provide additional details or advice about specific situations if desired.