TECHNOLOGY
“ It ’ s an increasingly tough fundraising period and it ’ s going to continue to be so for the next 12 months ”
VIVI FRIEDGUT CEO OF BLACKBULLION
meant to kill a cannibalising technology ! Some banks like Goldman Sachs have learned from the past and run their own incubators and accelerators , which allows them to identify early innovation and also to build relationships early .”
Will M & As continue to be as prevalent as the ecosystem expands ? The digital ecosystem has resulted in many more strategic partnerships and collaborations as well as M & As . Smaller startups no longer have to be absorbed by larger entities and can often just form an alliance whereby both companies benefit from each other ’ s products , services and marketplaces .
But Jonathon Parkinson , managing partner at
Marktlink , says one of the key benefits of merging with a larger company is the expansion of financial possibilities . “ By growing their share of existing customers and gaining access to new markets , utilising cross-selling opportunities is a powerful way to realise revenue synergies and combat competition .”
And he points out that , while acquisitions and alliances can achieve similar goals , partnerships can fail to provide the security that underpins M & A , as they often rely on continuous collaboration and nurtured relationships . “ The financial risk encountered by M & A investors , however , encourages greater commitment and a long-term will to succeed .”
The future of M & A in fintech Five years is a long time in the fast-growing fintech industry . New changes seem to transform the space from one month to the next . Experts believe the global financial market will look very different in five years ’ time , with fintechs being the biggest businesses in the financial services space , acquiring multiple businesses .
“ To some extent we are almost there ,” says Buckworth . “ Expect the likes of Revolut and others to suck up all the best technology solutions and become massive global businesses .”
Another predicted trend is that bricks and mortar banks will be owned by fintechs , and most branches will close . He continues : “ Traditional banks face increased costs due to their bricks-and-mortar branches , as well as high staffing costs . Fintechs don ' t . I predict that fintechs will acquire traditional banks , or parts of traditional banks , as a way of acquiring customers .”
Finally , regulators will play an essential part in supporting innovation and competition , says Buckworth . “ Open Banking and the Revised Payment Services Directive have helped accelerate adoption of fintech in the UK by allowing interoperability and third party access to data ,” he says , adding , “ This has allowed SMEs to compete directly with larger established businesses and will ensure that M & A activity remains strong going forwards .”
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