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    Fintech Week: How are evolving technologies affecting M&A?

    This year’s Fintech Week is set out to address the sector’s most talked-about issues ranging from international collaboration amongst FinTech Ecosystems to open banking.

    The world of technology is evolving at a significant pace and is now being referred to as ‘Industry 4.0’, mostly as an indication of developing into the fourth industrial revolution. This revolution occurred as the present manufacturing processes and large technological innovations merged together to introduce the next big manufacturing reinvention.

    UK manufacturers have been delivering sustained growth and evidently, investors continue to remain positive about the financial sector as the number of completed deals increased year-on-year along with marginally higher multiples. This has made manufacturing companies and technology embracing companies particularly attractive as acquisition targets. Evidently and as mentioned below, the recent times has showcased the volume of successful acquisitions within the Fintech sector, supporting the statement that investors remain optimistic about the industry.

    One of these attractive deals is the acquisition of PayNet by Equifax will boost SME credit access with primary focus on merging both company’s capabilities. This will offer inventive resolutions to commercial customers, alongside assisting them in growth and risk management. One of the main benefits of this acquisition is to increase access to capital for small and medium sized businesses. This increased access to capital opens development opportunities in areas such as artificial intelligence. For example, Appen’s acquisition of Figure Eight will provide a single-source global data annotation resolution for any company, which encourages the advancement of artificial intelligence. Other areas of technological development such as the use of the cloud data systems have also been a popular development with several businesses. The merge of Tink with Mash proved ideal as Tink offers cloud-based account combination and payment initiation services to assist financial service companies bring new solutions to customers. Similarly, Mash takes advantage of the opportunities in open banking to become a more data-driven company and deliver an improved customer service. Furthermore, where customer service is concerned, the acquisition Quova by Plaid presented a digital financial platform that provides customers with convenience and control over their financial assets wherever they go. This merge was ideal as both companies produce software platforms that connect banks with fintech apps.

    However, despite the rise in the number of acquisition deals, some companies can still be sceptical about certain changes, adopting Industry 4.0 and the impact it can have on their businesses, yet others have welcomingly embraced new financial technologies. They are either preparing for changes or anticipating a future where smart technology will improve their business and contribute to the achievement of goals. In Industry 4.0, data is supplied through machines and artificial intelligence platforms, making problem solving easier and more efficient and allows for effective and on-going improvements.

    A few of these key influential applications are robots which cost less and have higher capabilities than those used today, the industrial Internet of Things and the cloud concept that enables businesses to share data across sites and other businesses. Although Industry 4.0 is still in the process of evolution, most organisations realise its importance and implement it within the company culture, as well as recruit those with the suitable skills to understand and take on the new technologies.

    Furthermore, one of the main influences of the development of the Fintech revolution is the consumer’s adoption of managing their own finances through a selection of platforms. According to a source from Marketing Week (2019), 32% of the population have used a banking app to either complete a transfer or make a payment; increasing to 48% aged 15 to 34; some 11% have utilised an app from an online-only or mobile-only bank.

    During the Fintech week, Mark Carney, Governor of Bank of England, is listed as one of the speakers at its events and speculations suggest that he may indirectly highlight what companies should be thinking about. It has been outlined that due the nature of the UK Fintech workforce, connections to international talent and national skills are the main essentials in strengthening the UK’s position as global leader for fintech innovations. Additionally, along with the local community workforce, it is equally important to shield the welfare of the national Fintech organisations, ideally to portray that the UK in fact, provides the utmost support for Fintech, from education through to capital.

    Regardless of external influences, the UK needs to prioritise the next generations and ensure that they are competent trained to make contribute to a skilled workforce in order to sustain the UK’s position of global leader of fintech.

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