There's fever-pitch hype about fintech at the moment and with good reason. But let’s stick to facts. According to Pivotl data, three quarters of the way through 2015, global fintech investment is already double the total for last year. Traction building in verticals like payments and lending combined with appetite for emerging vectors drove fintech investment to $6bn by the end of September this year. That comes in at more than double the $2.8bn raised in the sector last quarter and the opportunity is only ripening for investors.
Disruption of these centuries-old sectors is hard and we’re likely to see as many failures as successes – especially in overcrowded sectors. Consolidation is a defining feature. Our key predictions for fintech M&A include:
• UK Firms Buying US Competitors - Velocity’s $7m acquisition of rival Cover seems small but it was notable because it’s a (still rare) example of a UK company buying a US competitor. With the UK’s fintech credentials only strengthening, we can expect to see more of these deals – reversing the wider trend of US companies snapping up European competitors.
• Swiss-Army Knife Acquisitions - Expect to see more fintech companies acquiring startups that offer complementary services. Think PayPal buying remittance firm Xoom for $890m, e-commerce payments firm Modest, security firm CyActive and mobile payment firm Paydiant ($300m).
• Consolidation & Failure - In the very short term expect the best to thrive, the best of the rest to get snapped up in a play for customers and geographical footprint. Many will fail.
Of course, finance isn’t the only ancient industry where tech is challenging the status quo. It’s no secret that VC investment in startups is swelling year on year. We’ve seen $53bn invested globally in the first three quarters of this year, which is just shy of the total invested across the whole of 2015. That’s a lot of cash to fuel disruption and traditional industries and tech darlings alike are feeling the heat. But how do you decode the data?
The speed of change means staying on top of the latest trends, break-out companies and deals is crucial. That’s given birth to a new generation of market intelligence tools and news trackers such as Pivotl IQ, which combines a business intelligence platform with thought leadership analysis and industry events to help c-suite execs stay one step ahead of the pack. Wondering who the tech success stories of tomorrow will be? Look no further.
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