Issue link: https://digital.shearman.com/i/1394543
29 The Changing FinTech Landscape: A Snapshot of M&A Themes and Trends Several Trends Are Converging to Drive Deal Activity In 2020 and 2021, several key trends were apparent across most verticals within FinTech. Digital-first financial products are growing due to the pandemic driving increased use of blockchain, cryptocurrencies, and alternative assets. FinTechs are focusing on diversifying product lines and tapping into new markets. Payment networks are also expanding into platform providers by providing a variety of different payment and non-payment services. We are seeing a new "banking stack" being built by a burgeoning host of "infrastructure" companies that are leveraging API-based products to unlock banking functionality for all kinds of organizations. Mastercard's purchase of Finicity is one example of where these trends converge. The resulting streamlined credit and payment infrastructure is made possible by Finicity's APIs. The purchase also allows MasterCard to expand into the mortgage and lending space thanks to Finicity's partnerships. From a global ecosystem perspective, the tie-up represents an example of how Open Banking in the U.S. continues to be driven by the corporate sector rather than being mediated by government regulation, as it tends to be in other countries. Tie-ups like this also demonstrate the obvious fit between a big financial institution and the right FinTech startup, but M&A can also mean a Big Tech enterprise acquiring a FinTech, or a big FinTech acquiring another FinTech. An example of the latter is SoFi and its newfound willingness to act as an acquirer. In April 2020, SoFi bought payment processor Galileo Financial Technologies, supplementing its consumer-led offering with new B2B components (like Mastercard by growing an API-driven infrastructure). Within a year, it had also announced an agreement to acquire Golden Pacific Bancorp, fast-forwarding its plan to become a national bank. In January 2022, SoFi announced that it had received regulatory approvals to close the Golden Pacific acquisition.