Payment processing, machine learning and data solutions firms have fuelled a $40 billion boom in UK FinTech mergers and acquisitions (M&A) in the first half of 2018, according to a new report.
A study of M&A activity in the sector by advisory firm Hampleton Partners recorded 141 transactions in the first six months of the year, with a total value of $39.3 billion - up 26 per cent on the previous half year.
The analysis showed a surge in the value of deals, driven by increasing uptake amongst consumers and enterprises of FinTech solutions, including digital banking, payments and financial data services, exemplified by the $17 billion takeover of Thomson Reuters by Blackstone earlier this year.
The booming market in digital payments and transaction processing accounted for two of the top five deals recorded in the FinTech sector in the first half of 2018, with Paypal’s $2.2 billion acquisition of Stockholm-based payment provider iZettle leading the field.
As for online and electronic payments processing, whilst the transactions were predominantly focused in the US market, the largest of these deals went to the $442 million sale of First Data’s card processing business in seven European countries to its Italian rival SIA.
Looking ahead, the study’s authors predicted that the next wave in FinTech transactions would involve blockchain and InsurTech applications, as well as Open Banking, as Europe’s second payment service directive (PSD2) becomes more established amongst financial services firms – a process the firm labelled a “major game changer” that would drive pan-European competition in the payments industry.
Jo Goodson, managing director at Hampleton Partners, said: “Fintech M&A activity is coming of age after the initial surge in somewhat random deal-making amongst the very early innovators.
“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,” she added.
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