Banks & FIs Are Increasing Their FinTech Acquisitions and Investments

September 8, 2021

From emerging as competitors to becoming collaborators, the bank-FinTech partnership continues to evolve. The FinTech wave began with the objective of breaking banks and incumbents by disintermediating their service lines and adding an innovative, tech-driven customer experience to deliver innovative offerings. While many FinTechs have established their unique capabilities as a stand-alone entity, the narrative has moved on from breaking banks to working with banks and is in line with working for banks in the coming years as FinTech players now see banks as a valued partner and a potential customer.

On the other hand, banks now understand that it’s not prudent to look at FinTech as a competition. Instead, they are increasingly looking to leverage FinTech’s superior technology and front-end capabilities while FinTechs are looking to leverage banks’ vast customer base, infrastructure, and a regulatory stronghold to gain scale.

There were hundreds of bank-FinTech partnerships in 2017 through various avenues, including accelerators, innovation programs, hackathons, etc. However, banks are now looking beyond accelerators and innovation programs. In December 2017, we wrote about how banks and incumbents will turn to acquisition as part of their aggressive innovation strategy, aided by increased investments. We have already seen some early signs as one of the leading insurance incumbents, Allianz, had announced the changeover of its in-house incubator, Allianz X, into a new venture capital investment arm. Banks and other financial institutions are also looking to be following a similar trend as investment activities began on a strong note in 2018.

In the first four months (Jan. '18 – YTD), there were seven FinTech acquisitions made by banks and FIs across the globe. Goldman Sachs acquired Final and Clarity Money; RBS acquired Free Agent; IDFC acquired Capital First; TD Bank acquired Layer6; and American Express acquired Mezi and Cake Technologies.

In addition to these five acquisitions, there were 35 FinTech investment deals made by banks in the same period. We can expect this trend to continue and maybe even pick up the pace as the year unfolds. Possibly, some of these incumbents could follow a hybrid strategy by having an innovation department that tries to find solutions to embed and jointly launch an investment arm to take a seat on the board and guide the direction of the company.

By finding the right mix of acquisition and investments, banks and incumbents will be looking to up their FinTech game and come up with innovative solutions to address the evolving needs of their customers in this tech-first era of financial services.

To learn about Prove’s identity solutions and how to accelerate revenue while mitigating fraud, schedule a demo today.

Keep reading

See all blogs
Prove’s Tim Brown Explains How to Reduce Fraud and Improve Onboarding with Identity Verification

Reporters from GreenSheet, a popular publication that highlights trends in the banking, financial services, and fintech markets, recently met with Prove’s Global Identity Officer, Tim Brown to learn how advanced identity verification solutions are driving faster and better digital customer onboarding.

Kaushal Ls
May 21, 2024
Prove CEO Rodger Desai Featured on Fintech Leaders Podcast

Prove CEO and co-founder Rodger Desai was recently the featured guest on the Fintech Leaders podcast with fintech leader and entrepreneur Miguel Armaza. The two discussed the identity verification market, innovations in onboarding and customer enablement, and explained how smartphone data provides the most effective way to verify customers.

Kelley Vallone
May 16, 2024
Marketplace Risk Proudly Names Prove as the Leader in Identity Authentication

Marketplace Risk, a leading authority in risk management for online platforms, has announced the recipients of its annual Solution Provider Excellence Program. This prestigious initiative spotlights industry leaders in risk, trust, and safety solutions, showcasing their expertise in addressing the challenges encountered by digital marketplaces, gig economy, and digital platforms. Among the winners is Prove.

May 15, 2024