December 10, 2018
[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:
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
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
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.