Chart of the day
If you can't beat them, join them
A survey by Tenemos of 300 global banking executives across retail, private and commercial banking found that 44% of respondents believe that banks will acquire majority stakes in fintechs, while 32% believe that there will be market consolidation among challenger banks in the next one to three years.
While banks deepen their collaboration with fintechs to increase access to technology and a range of innovative financial solutions, they are also in fierce competition with these non-traditional entrants to own customer relationships. As such, one way for banks to alleviate this threat may be through fintech acquisition. With fintechs arguably becoming more aligned with regulatory and compliance landscapes in 2023, banks may feel more obliged to acquire fintech companies, especially with some fintechs carrying cheaper valuations amid a strained macroeconomic environment.
In fact, Charlie Youakim, CEO of payments platform Sezzle, sees banks ramping up fintech acquisitions as we head into 2024. Will he be correct?
That could lead to a significant churn of fintech clients as banks seek to migrate away from platforms owned by their competitors