Consolidation continues at pace—mega-mergers on the horizon
The wait is over. Whispers of mega-deals have matured into agenda items for boards of many larger European banks.
Introduction
As global fintech funding in Q1 2019 approaches US$6.3 billion, London is poised to rival San Francisco as stable to the highest number of unicorns.
Established European financial institutions have joined the fintech race, hoping to harness the promise of technology—a smooth, tailored and safe consumer experience, available everywhere and to everyone. However, innovation is expensive, absorbing valuable resources at a time of unresolved trade concerns, fragmented markets, political uncertainty and unknown Brexit impact.
Do fintechs justify such high valuation multiples? Can fintechs really deliver the seemingly endless possibilities? Would resources be better allocated elsewhere?
In this series of biannual reports, we analyse inorganic investment strategies and highlight the key M&A trends across Europe and the UK in H1 2019. Focusing on banks, fintech, and other financial services (i.e., asset/wealth management, market infrastructure, consumer finance and Specialty finance), we also provide our insights into the outlook for H2 2019 and beyond.
European financial services
M&A trends
Stampede of the unicorns
H1 2019 has seen European fintech M&A hit new heights. Fintechs have enjoyed funding support from established financial institutions, financial sponsors, sovereign wealth funds, data giants and family offices. The next 36 months will be pivotal in identifying fintechs which will revolutionise financial services
Asset/Wealth Management
Fallout from MiFID II continues to drive industry consolidation. In the last 6 months, there has been a glut of smaller deals, but a dearth of megamergers
Payments
By Jan Jensen and Darragh Byrne
Rapid rise of mobile commerce, e-commerce, growing merchant/ consumer familiarity with non-bank providers and accessibility by under-banked communities are all driving demand for electronic payments. It is no surprise that M&A levels have reached stratospheric heights, and show little sign of descending
Stock exchanges/Clearing houses
By Dr. Jost Kotthoff and Dr. Lutz Krämer
Seeking multijurisdictional scale, as concerns around long-term viability of the independent stock exchange operational model continue to grow
Brokers/Trading service providers
By Hugues Mathez and Franck De Vita
Market consolidation continues. MiFID II, sluggish capital markets, increasing operational overheads and over-brokered European financial centres drives M&A
Credit cards/Consumer finance
By Henrik Wireklint and Daniel Turgel
Financial sponsors provide dry powder to new entrants seeking to disrupt existing card providers, 'level-up' in-store consumer finance solutions/experience and fill the void left by payday lenders
Specialty Finance/Marketplace lending
By Ashley Ballard and Hyder Jumabhoy
Trade consolidators dominate the M&A charts, seeking scale, vertical integration and opportunities to conquer their own niches
