Presented by Mergermarket
A recent Goldman Sachs report states that an astounding USD 4.7tr in bank sector revenue is at risk of being displaced by fintech firms over the next several years. McKinsey calculates that 10 – 40% of retail banking revenues and 20 – 60% of profits are at risk through 2025. Core bank operations that make up lending, payments, and wealth management coincidently also consist of fintech’s most exciting innovations, signaling that disruption will be felt along Wall Street for years to come. Venture capitalists foresee change which has manifested into USD 8bn in global VC funding in the 1H 2016, according to one Mergermarket study. As fintech firms continue to play a growing market role in banking so too will such firms find themselves in deal making. For instance, in the ninth largest financial service sector M&A deal this year, an investor group led by China Investment Corporation took a USD 4.5bn Series B stake in online payment platform Ant Financial Services Group (EV USD 60bn).
Struggling retail and investment bankers will have few options as promising as fintech firms that increase efficiencies and cut costs. Industry observers agree that M&A activity will increase very rapidly as soon as the industry shakes out. However, challenges remain as an incoming Trump administration clouds the regulatory regime in the US and cybersecurity remains daunting.
Listen to panelists discuss the opportunities and challenges tech companies, traditional banks, and "alternative capital" firms can expect to encounter in 2017.