FinTech

Last Year, We Said Banks Would Buy & Invest More in Startups – What Happened?

MEDICIFounder and Chief Strategy & Innovation Officer

[UPDATED 12-Dec-2018] This is the time of the year when many consulting, research, and media firms make FinTech predictions. We wanted to do it differently this time but also wanted to put ourselves to the test. Skin in the game is what we are doing here; let’s look back at the predictions we made last year and see where we have reached. In December 2017, we predicted that banks would start buying FinTechs, invest more, and learn to benchmark innovation in 2018. We also predicted that, in the year 2018, you can see new venture arms/funds of FIs/banks cropping up and that you would see more action from the existing venture arms of banks. Some banks may not have these arms or may not call them that, but you will see corporate development and M&A teams getting into action. So, has this prediction really come true?

Let’s take a look at the investment and acquisition deals of 2018:

Analysis of Investment Deals

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Investment Deals

  • Total Investments deal value - 5.0B USD

  • Total number of deals - 159

  • 74 of Banks have invested in 142 FinTechs.

  • 10 of Insurance companies have invested in 15 FinTechs.

  • 2 of Asset Management companies have invested in 2 FinTechs.

Here are some of the top investment deals:

  • Deutsche Bank, Mitsui Banking Corporation & Goldman Sachs invested USD 900M in Prodigy Finance

  • Goldman Sachs has invested USD 250M in Cadre

  • Credit Suisse has invested USD 200M each in OnDeck & BlueVine

Analysis of Acquisition Deals

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Acquisition Deals

  • Total acquisition deal value - 1.4B USD

  • Total number of deals - 20

  • 10 Banks have acquired 13 FinTechs

  • 2 Asset management companies have acquired 2 FinTechs.

  • 5 Insurance companies have acquired 5 FinTechs.

Some of the top acquisition deals:

  • IRIS Software was acquired by Intermediate Capital Group for USD 1.36B

  • Relayr was acquired by Munich Re for 0.3B

  • Freeagent was acquired by the Royal Bank of Scotland for USD 0.06B

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The banking industry is going through a massive disruption. Over the last few years, traditional financial institutions and non-traditional FinTech firms have realized that collaboration may be an effective path for long-term growth. The future of the banking industry will depend on its ability to leverage the power of customer insight, advanced analytics, and digital technology to provide digitized services that help the new-generation, tech-savvy customers to manage their finances efficiently.

Apart from the ongoing FinTech investments and acquisitions in 2018, we have also witnessed some large financial companies getting acquired by the corporate giants in the finance sector:

  • XL Group was acquired by AXA for USD 14B

  • Blackhawk Network was acquired by Silver Lake & P2 Capital Partners for USD 3.5B

  • Genoa Healthcare was acquired by UnitedHealth Group for USD 2.5B

  • Adira Insurance was acquired by Zurich Insurance Group for USD 0.4B

Investments or acquisitions made in the large FinTech space:

  • BNP Paribas invested USD 0.03B in Digital Reasoning

  • ING Group acquired Payvision for 0.30B

  • Grupo Supervielle acquired InvertirOnline for 0.03BM

As financial and technology companies are embracing a wider view of banking by delivering both banking and non-banking services, the ultimate winner will be the consumer irrespective of the provider they opt for.

Amit Goel

MEDICIFounder and Chief Strategy & Innovation Officer

“Amit Goel is the Founder & Chief Strategy & Innovation Officer for MEDICI. Amit’s vision is to build a strong FinTech market network that involves financial institutions, banks, startups, investors, analysts & other key stakeholders across the ecosystem – helping each one of them in a meaningful way by removing the asymmetry of information and providing a platform to engage & transact.\ \ Amit is passionate about bringing actionable FinTech-focused insights, innovative products & services for the FinTech ecosystem. Some of his work involves startup scores, bank scores/assessments, predictive viewpoints & other innovations that have helped MEDICI’s customers and the ecosystem. He has been named amongst the Top 100 FinTech thought leaders/influencers in the world & Top 10 in Asia multiple times by reputed agencies, consulting firms as well as financial institutions. Amit has built MEDICI (formerly LTP) as a new-age, tech-enabled advisory/research firm, which is now considered the #1 global research & innovation platform for FinTech in the world.\ \ Amit has been writing pioneering viewpoints on financial technology space that have been ahead of the curve since 2010. His data-driven predictions have helped the customers as well as the ecosystem. His past work experience includes a strong background in strategy & market analysis and advisory to clients (from big business houses to Fortune 500 firms) in payments, commerce, financial services & IT/technology. In the past, Amit had also founded a successful consulting & research practice called GrowthPraxis and has worked at Boston Analytics, Frost & Sullivan, and Daimler Chrysler in strategy & research.”