The report underscores how the financial technology sector, covering a raft of business areas, is as big in M&A levels of activity as the underlying financial industry itself.

Development of blockchain technology and integration of ESG ideas into investment management are among the drivers of fintech merger and acquisition activity around the world over recent months, a report says. 

Goldenhill, an M&A advisory firm, says the second quarter of 2022 witnessed 142 transactions in the fintech sector. The overall number of deals remained consistent with the previous quarter but was below the busy heights of 2021. That equates to a 13 per cent slowdown on a year before. Aggregate disclosed deal values rose during Q2, more than four times the level of the first three months of this year, due to the announcement of several large deals in the $1 billion+ bracket, such as ICE’s acquisition of Black Knight for $16.3 billion.

Banking software accounted for the most deals (20 per cent) – again followed by payments (17 per cent). Asset and wealth management software accounted for 11 per cent of deals. 

Within the asset and wealth management software category, buyers included Allfunds Group (UK); HCL (UK); CyborgTech (US); Gemspring Capital (US); Huddlestock (Norway); Envestnet (US); SS&C Technologies (US); Vitec Software Group (Sweden); SAS Institute (US); Universis Corp (Canada); Ontra (US), and Institutional Capital Network (US). 

In the banking software space, notable buyers were finnova AG Bankware (Switzerland); SS&C (US); Orion Advisor Solutions (US); American Express (US); and Sitel Group (Luxembourg).

Driving change and deals
Among the broader themes of the report, it said that while the digital assets space has been hit by falls to bitcoin and other cryptocurrencies, the promise of the underlying blockchain technology remains strong and helps to drive some M&A activity. A segment of particular interest is “blockchain-as-a-service,” or BaaS. In the past quarter the acquisition of Velo Labs Technology (a platform on which CeDeFi applications can be built) by Evry Network is “symbolic of the growing interest around BaaS,” the report said.

Separately, requirements for financial groups to embed environmental, social and governance (ESG) elements into investments means that firms are buying organisations to give them an edge in the space, the report said. 

“Climate change remains and is likely to remain a significant concern for both investors and businesses over the next 10 years, if not longer. There is also a strong public demand for more diversity and Inclusion and corporate governance measures. These factors combined give the ESG market a firm trajectory for continued growth,” the report said. 

For example, the second quarter saw the acquisition of two ESG data collection companies, Energydeck and Aquantix Financial, which provide ESG data on real estate assets.