7
The Changing FinTech Landscape: A Snapshot of M&A Themes and Trends
As U.S. Federal Reserve Governor Michelle Bowman
described it, COVID-19 may have ushered a "quantum
leap in the use of digital deposit, digital payments,
and online lending." As these digital use cases have
gained broad adoption by consumers, regulators
have continued to increase their focus on digital
matters. The U.S. Department of Justice's (DOJ)
opposition to the Visa / Plaid merger reemphasizes
that antitrust regulators will carefully scrutinize M&A
in the FinTech sector, particularly when it involves
established players with large market shares and
nascent competitors with the ability to innovate and
potentially disrupt a market.
Currently, the U.S. offers a variety of agencies,
programs, and regulations that can oftentimes be
a challenge for both FinTech startups and newly
digitized banks. While regulators have generally
advanced "pro-innovation" positions, they continue
to focus real scrutiny on FinTech, particularly on
banks' relationships with FinTech companies and
on FinTechs' consumer- and data-related practices.
Regulatory complexity is not new to the financial
sector. However, it poses a challenge for many
early-stage FinTech businesses. We expect that
the Biden Administration will take a tougher stance
toward some FinTech companies, which may lead
some of them to partner with more established
FinTechs and banks. This increased regulatory
scrutiny should drive even more consolidation in
the FinTech sector, which could result in additional
attention from antitrust regulators.
EVOLVING REGULATIONS ON THE HORIZON
The pandemic has demonstrated
the importance and unique role of
technology in responding effectively
to new challenges. In the financial
sector, I believe we may be seeing
a quantum leap in the use of digital
deposit, digital payments and online
lending.
— U.S. Federal Reserve Governor Michelle Bowman
Remarks at the Independent Community Bankers
of America ThinkTECH Policy Summit (Dec. 4, 2020)
1
Dietz, Miklos, et al. "Bracing for Seven Critical Changes as Fintech Matures" McKinsey & Company, Nov. 2016.
