Financial Firms Reportedly Looking to Buy FinTech Startups
In addition to that near majority set on acquiring their competition, 80% said they’d be looking to at least partner with FinTechs in some way. Both of these figures suggest that traditional finance companies no longer look at FinTech just as the enemy but as the future. As PwC’s Steve Davies explains, “FinTech collaboration is not about jumping on the latest bandwagon — it’s about finding the best, most efficient way to deliver your business strategy and ultimately better serve your customers.” He added, “The financial services industry has embraced FinTech.”
Of course, despite Davies’s assertion that potential partnerships would be formed in the name of customer service and efficiency, it seems that financial firms also fear FinTechs to a certain degree. In fact 80% of executives surveyed shared their concerns of losing revenue to startups. To that point, it seems that financial mainstays may not only see the value in FinTech innovation but perhaps see a little too much value in them.
Meanwhile one major banking institution is already seeing the power of FinTech for themselves: JPMorgan Chase. As I’ve discussed here before, the too-big-to-fail bank has been somewhat of a leader in the field, having partnered with companies like OnDeck, while also launching their own incubator for startups. Now Business Insider reports that CEO Jamie Dimon has pointed to these efforts as a reason for the institution’s strong performance as of late.
In a letter to shareholders, Dimon shared that his company invested $9.5 billion in technology last year with $3 billion of that going to new projects and $600 million spent on exploring “emerging FinTech solutions.” He also singled out partnerships with existing FinTechs, saying they helped improve the bank’s offerings. Incidentally, Dimon echoed Davies, saying both customer service and efficiency had improved as a result of FinTech-centric initiatives.
Between the result of PwC’s study and the revelations that Jamie Dimon has shared with Chase shareholders, it’s clear that FinTech is still shaking up the financial industry. In fact, while the past few years have brought lots of talk and a handful of actions in the way of partnerships, it seems the near future will be the real boom for FinTech acquisitions. In turn, expect more innovation as young entrepreneurs set their sights on FinTech as the sector continues to grow and, of course, disrupt.