The report below gives a good overview of the Summer 2023 M&A activity in the Financial Services/Fintech Industry Sector. The global financial services sector continues to grapple with geopolitical tensions, supply chain disruptions, and the possibility of a regional or global recession. The anticipated rate hikes by the U.S. Federal Bank are expected to cause financial strains, affecting lending and borrowing rates. According to a CNBC report, there is a 90% estimated likelihood that the Fed will raise interest rates to a range of 5.25% and 5.5%. This would result in higher borrowing and investment costs, potentially increasing the risk of loan defaults. IMF outlook of April 2023 forecasted the growth rate to fall from 3.4% in 2022 to 2.8% in 2023, before settling at 3% in 2024 with global inflation expected to fall to 6.6% in 2023 and 4.3% in 2024, still above pre-pandemic levels. The collapse of a few banks namely Silicon Valley Bank (SVB), which specialized in lending to start-ups, including FinTech, and Signature Bank, sparked investor fears, lawsuits, falling share prices, and US government intervention, led to disruption of the financial services that the bank provides to its clients. The compliance burden concerning legislation and regulation around digitalization, climate change and environmental, social, and governance (ESG) issues for financial institutions has increased significantly over the past decade and are considered to be persistent. Despite the challenges and shortcomings faced by the industry, the global financial market grew from $25.8 trillion in 2022 to $28.1 trillion in 2023 at a CAGR of 8.8% and is further expected to grow to $37.5 trillion in 2027 as reported by the Business research company. Such growth can be attributed to the adoption of digitalization and big data analytics.
Posted by David Sinyard.
Read the Entire Summer 2023 Financial Services/Fintech Report Here