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Fintech: Consolidation process in the sector as large players move in

The Fintech sector is rearranging to become a real contender in the consumer banking industry, and that process of consolidation starts with joining forces to turn into a more integrated sector. Since heavy investment is needed to go head to head with more powerful rivals, the “stronger together” pitch may repeat itself among the middle-size companies that have flourished in this sector so far.

This reorganization seems especially needed in the payments sector, where the M&A has grown exponentially in the last three years.  Although there is still a lot of deal making expected to happen in the next few years, this reshuffle has ended up with four noticeable key players that will be likely to concentrate the sector even further.  Europe looks like the region where most of this deal making will be taking place, as it is still the most fragmented market of all. Dutch and Italian market leaders, Adyen and Nexi respectively, are expected to lead the M&A activity in the old continent for the next few years.

Although a great deal of mergers and acquisitions are expected to occur in fintech, the more established companies do not seem to have problems to find investors to boost their businesses. As revenues keep growing significantly in the financial technology market, both big and small investors are showing burgeoning interest in the expansion of fintech companies. It does not come as a surprise that investors are willing to bet heavily in this business, since the current march of e-commerce and the strong promise of cryptocurrency ensure a brilliant future for the financial technology and services industry.

In fact, the signs of good health that the consumer market shows are attracting big tech companies to the financial technology sector. With some of the Asia tech giants already deep in the payment sector, where they have become absolute global leaders, it has not taken long before American big tech decided to do the same.