Banks target more FinTech acquisitions, partnerships to boost market standing

A report by Lloyds Bank has found more UK banks are targeting collaboration and acquisitions with FinTech firms to strengthen their position in the growing market.

The findings were included in Lloyd’s sixth annual Financial Institutions Sentiment Survey, which harvests opinion from major banks, wealth management companies and asset firms as well as insurers and intermediaries both in London and over the UK.

The report found 46% of financial services firms intend to grow investment in their FinTech capability through acquisition and partnering over the next year – up from 32% last year. Meanwhile, developing new products and services was the biggest driver of companies’ FinTech plans at 66%, followed by improving client experiences and driving growth at 53% and 49% respectively.

Up to 77% of senior leaders at UK financial institutions claimed that technology, digital investment and automation were top strategic priorities for the year ahead, with 77% of companies also expecting to grow investment in their technology systems and core platforms over the next year – up from 62% in 2020.

Companies surveyed by Lloyds said their top technology investment priorities are the cloud at 83%, APIs at 77% and data science – including AI and machine learning – at 63%. Up to a third of businesses are also prioritising investment in blockchain, which is up from 27% in 2020.

Lloyds Bank head of payments and receivables for client products Steve Everett said, “The UK has one of the most vibrant FinTech communities in the world. They are at the forefront of innovation within financial services and, by partnering with them, the UK’s largest firms are showing they are committed to developing new products and services to meet changing client needs through collaboration.”

Lloyds Bank Commercial Banking head of financial services Adrian Walkling added, “UK financial services firms did not pause technology investment last year when the sector was navigating a significant period of disruption. They still, however, had to allocate significant resource to ensure all of their employees could continue delivering for clients at home.

“The pandemic is not over, but firms are now in a position to focus the lion’s share of their investment on growth and supporting clients, and it’s great to see they plan to do so using both established and emerging technologies. Innovation is the bedrock of UK financial services and will help the sector continue to lead the pack.”

While the acquisition of FinTechs by banks is still not massively common, there have been some examples. Earlier this year, JPMorgan Chase entered into an agreement to acquire San Francisco-based OpenInvest, a FinTech startup that allows customisation and reporting on ESG investments. Last year, American Express acquired small business loan platform Kabbage.

Copyright © 2021 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.