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This month marked one of the largest fintech acquisitions of all times, Visa’s purchase of Plaid for $5.3 billion. It is a validation of fintech in a literal sense – Plaid is a key enabler to many of the leading fintech players, and critical in simplifying the onboarding flow and integration of players. It may also be a bellwether for the year: 2020 may be the year for fintech.
Four important and interlocking trends will drive this.
Plaid is not alone. While historical fintech acquisitions have been smaller, early signs indicate incumbents have a growing appetite for larger deals. The last couple years have seen an acceleration of large fintech acquisitions and funding rounds. For example, Paypal completed its largest ever acquisition, Honey for $4 billion.
Incumbents have also been active: Charles Schwab purchased TD Ameritrade for $26 billion. Infrastructure players, “Fiserv Inc., Fidelity National Information Services Inc. and Global Payments Inc. did a series of deals that transformed payment processing in the U.S.”, according to a Bloomberg analysis. There of course have been some recent IPOs as well, notably Bill.com’s at approximately $1.6 billion.
The pipeline of fintechs is growing too. The quarterly funding for fintech has been on the rise over the last few years (excluding the exceptional Ant deals). In 2019, there were over 59 mega rounds, defined as over $100m, globally (and this is only to Q3).
This is set to continue. There are an increasing number of fintech funds, and mainstream funds where fintech is part of the allocation. As a result, we will see an acceleration of ever larger innovators and ultimately (hopefully) large successful exists.
Read more at Forbes here!
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