Nearly one third of financial firms eye fintech M&A

THREE quarters of banks and asset managers worldwide are looking to boost their collaboration with fintech companies to become digitally competitive, a new survey found.

And 31 per cent will seek to buy a fintech company over the next 12 to 18 months, research from law firm Simmons & Simmons said on Friday.

Read more: Fintech has moved from foe to friend of financial services

The firm surveyed 200 senior-level respondents across five financial cities to investigate why most large institutions in the financial services sector are struggling to innovate quickly enough.

The M&A appetite in the digital space was stronger among New York firms, with 39 per cent of respondents eyeing fintech deals, compared with 29 per cent in London and 21 per cent in Hong Kong.

On the negative side, many traditional financial companies remain sceptical about the risks associated with fintech firms, with 71 per cent of respondents seeing cyber security as a major stumbling block in partnering with such businesses.

And regulatory risks are dissuading another 45 per cent from putting an offer on the table.

“With this focus on acquisitions and investments, it is essential to adopt a streamlined process for executing transactions and to ensure that regulatory and reputational considerations – which could have an impact on the viability of a proposed transaction – are dealt with upfront,” warned Khasruz Zaman, an M&A partner at Simmons & Simmons.

Read more: Bankers most fear losing consumer loans to fintechs

Read more: Fintech Week 2017 set to showcase the UK’s strengths