The Global Fintech sector is witnessing a lot of action. Fintech startups are able to provide a lot of financial services to billions of people with just a mobile application, thus making bank officials nervous about customers who may choose to do everything digitally over an app. On the other end, there are banks who feel they can acquire or collaborate with fintech startups or have their own fintech division which will allow them to reduce costs, save time and serve their consumers in a better way.
This seems to be the only way for banks to become stronger and serve their consumers better. However, there are many banks that prefer to invest in startups and letting the founders being in control of the vision and direction of the company. Banks and PEs have invested over $132 billion in Fintech startups since 2010. Global behemoth J P Morgan is said to have spent over $10 billion on updating their technology. That is the kind of urgency and hunger that banks have with respect to Fintech. Just like the mobile payments app Freecharge was sold to Snapdeal for $400 million, there are many more startups which are ripe for acquisition. The amount that banks and PEs are willing to invest is just a small number as compared to the value that these startups can provide as innovation and implementation are very difficult for banks who are not experts in technology.
A sample of things to come is the acquisition of French digital bank Compte-Nickel by BNP Paribas for $213 million. Banks also realize that as the World moves towards a digital economy, they need someone with the expertise and vision in that field to guide them as they grow. Hence, mergers and acquisitions will soon be the norm in this industry.