Disruptive technology as a driver of M&A in the financial institutions sector – key trends

The financial institutions sector has readily embraced the opportunities presented by technological innovation and disruption and the race is on to maximise growth, often through acquisition.

• Billions of US dollars have now been invested in financial technology businesses. As investments mature, exit pressures on investors will lead to later stage M&A investment opportunities.
• Businesses are establishing specific investment arms, often with a different risk profile, which are looking to target new technologies that may complement wider business strategies.
• Established financial institutions are looking to share risks and costs and harness new technologies across the value chain by collaborating in joint ventures and consortia, often with the aim of developing industry-wide solutions
• Acquisitions are being undertaken in order to build new capabilities, products and client offerings, as well as to enhance current products to improve the customer journey.
• Disruptive technology has provided alternative forms of fundraising, including peer-to-peer and tokenisation. Such additional capital could lead to investment through M&A.
• Collaboration has become a key trend as industry incumbents and new, disruptive entrants, seek to combine know-how to hasten innovation in existing business models.

Case study

Norton Rose Fulbright advised Australian-founded Avoka, a leader in digital customer acquisition and on boarding, on its acquisition by Swiss Exchange listed banking software company Temenos AG.

The A$339m (US$245m) acquisition will see the Avoka platform, Avoka Transact, integrated with Temenos’ Digital Front Office product, and will provide Avoka with the resources and scope to further develop on the world stage.

Avoka currently service over 85 customers through a cloud-based SaaS model, and its award-winning technology is used in all banking sectors, including retail, corporate and wealth. Avoka Transact is a digital platform used by financial institutions to create the quickest and easiest account opening and on board customer experience.

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