Friday, July 30, 2021
Diverse perspectives on emerging trends and dominant brands shaping the consolidating U.S. fintech industry, presented in the report, were further explored on July 29, 2021, in a webinar hosted by S&P Global Market Intelligence.
Donna Parisi, global head of financial services and fintech at Shearman & Sterling, mentioned the report was a joint effort to analyze data across a diversity of financial institutions, fintechs and service providers. "The analysis and conclusions in this report are based on data provided by our colleagues at S&P Global Market Intelligence, underlining their role as a market-leading provider of information, research and analysis in the FinTech sector and beyond," she said.
During the webinar, Nimayi Dixit, research analyst with S&P Global Market Intelligence, pointed out that general consumer trends and economic uncertainties had no impact on the fintech sector as a whole. "The specific characteristics of the COVID-19 crisis accelerated the adoption of digital financial services, which will impact the ways in which a maturing fintech industry converges and collides with the incumbent financial services infrastructure," he noted in a statement.
Dixin also said during the webinar discussion that fintechs benefited from digital adoption as a secular trend, but "if you go one layer deeper, you'll find that each vertical experienced the shutdown differently and the pandemic had different ripple effects across the fintech ecosystem."
Researchers found that fintech consolidation accelerated during the pandemic in response to growing demand for mobile payments, banking, insurance and investment services. "The growth in mobile payment options will also be rich for M&A as banks enhance their mobile platforms or offer transactions in digital currencies," they wrote.
Researchers further noted that near-term future outlook for fintechs will be shaped by three trends: a change in fintech rankings that favors strong and stable companies, traditional banks offering more robust mobile services, and greater regulatory scrutiny.
The research study predicted that more mergers and acquisitions will take place among financial institutions, technology service providers and independent software vendors in the near future. "As the FinTech industry rapidly matures, our forecast for the remainder of 2021 and 2022 sees a wave of consolidation on the horizon," researchers wrote.
Roger Morscheiser, partner in the mergers & acquisitions practice at Shearman & Sterling, agreed, stating that the industry is consolidating in both new and traditional ways. SPACs, for example, "offer a way for fintechs to access capital faster than a traditional IPO, because the regulatory process is faster," he said.
With SPAC activities continuing at a breakneck pace, Morscheiser suggested regulators and the SEC may question forward-looking statements, particularly in the fintech sector, which has favored ambitious valuations and projections by pre-revenue companies that rely on safe harbor laws and disclaimers.
A copy of the report is available at sites-shearman.vuturevx.com/47/3500/landing-pages/access-report.asp
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