The report below gives a good overview of the Winter 2023 M&A activity in the Financial Services/Fintech Industry Sector. The global financial services firms are expected to face tougher market conditions in 2023 marked by weak economic growth, high-interest rates, and recent Chinese lockdowns. The global economic growth is expected to decline further in 2023, after a year characterized by the Russia-Ukraine crisis and soaring inflation, which prompted one of the fastest monetary policy tightening cycles in recent history. The increasing inflation and interest rates could have a vast impact on the mortgage, financial advisory, and insurance industries, making their products and services more expensive for consumers, and ultimately resulting in lower demand. The recent surge of Covid-19 cases in China is expected to impact the global financial market. The average daily yuan/dollar trading volume in China's interbank market fell to $20.0 billion in December 2022, the lowest amount since April 2022, when Shanghai was forced under a two-month lockdown to stop the spread of the virus, as per an article published by Reuters. However, it is expected that financial services industry would be able to withstand these macroeconomic and geopolitical conditions by reducing non-core operations and boosting capital & liquidity positions. Furthermore, high interest rates are likely to benefit the banking sector because it allows them to charge more for each credit line they underwrite. Additionally, the increasing investments by financial firms in advanced technologies such as blockchain is predicted to significantly reshape and establish new possibilities in the future.
Posted by David Sinyard.