THE VALUE of fintech M&A deals hit $39.3bn (£30bn) in the first half of this year, according to new research.
A report from technology M&A advisors Hampleton Partners noted 141 transactions in the first half of 2018, with a 26 per cent increase in value from the first half of 2017.
Hampleton said that machine learning, financial media, data solutions and payment processing companies all fuelled the first-half 2018 deals.
Two of the largest deals saw payment processing firms acquired with Paypal paying $2.2bn for iZettle and Worldline buying SIX Group for $2.75bn.
“Fintech M&A activity is coming of age after the initial surge in somewhat random deal-making amongst the very early innovators,” said Jo Goodson, managing director, Hampleton Partners.
“Now, corporate and financial buyers alike are chasing larger and more targeted investments which can help streamline back-office operations, improve the digital customer experience and cut costs.”
Royal Bank of Scotland’s purchase of FreeAgent, an accounting software firm, is one example of banks using these deals to update their legacy infrastructure.
According to Hampleton, the next wave of fintech M&A will be driven by blockchain solutions, insurtech and Europe’s Revised Payment Services Directive (PSD2).
“For the remainder of 2018 going into 2019, we’re anticipating a number of blockchain solutions will come to market and that insurtech could spark a major wave of deals as traditional insurers step up their efforts to innovate their consumer and enterprise offerings through M&A,” Goodson said.
“Going forward, the implementation of Europe’s Revised Payment Service Directive, or PSD2, is likely to be a major game changer for the deal landscape, as it encourages pan-European competition and participation in the payments industry, including non-banks.
“New entrants will find a level playing field and harmonised consumer protection and rights which will encourage new entrants to the financial services market and fuel further M&A deal growth and valuations.”