The Biggest FinTech Deals in History are Taking Place NOW

The financial services industry is experiencing unprecedented changes. New FinTech players are challenging the status quo and are disrupting incumbents from below. 

It is becoming increasingly harder for the legacy players to react and stay relevant. One of the ways to stay on top of their game is to heavily invest in technology --- in fact, I have argued earlier that in in order to survive, banks need to become technology companies.

Another way of keeping up the pace is through consolidation, with partnerships, deals, and acquisitions. It is interesting to note that just since the beginning of 2019, three of the eight largest FinTech deals of all time have been announced.

Since the beginning of 2019, three of the eight largest FinTech deals of all time have been announced.

Therefore, in this article, I would like to take a quick look at the five largest FinTech deals over the last two years and understand their bits and pieces. You can see a quick snapshot of all the deals below:

The 5 largest FinTech deals of the past two years

1. In March 2019, Fidelity National Information Services, commonly referred to as FIS, agreed to acquire Worldpay for $33.5 billion, in what will be the largest FinTech deal ever. After the deal, FIS shareholders will own about 57% of the company, with Worldpay investors receiving the remaining 43%. Management believes the transaction will result in about $400 million in cost savings and $500 million in new revenue opportunities for the newly established company, which will continue to operate under the FIS name. The deal combines one of the largest issuer processors, FIS, with one of the largest merchant processors, Worldpay. An issuer processor settles and authorizes credit and debit card transactions for the financial institution that issues the card. A merchant processor facilitates the same transactions for the seller. Hence, the new company will have data from both sides of the transaction. The deal also gives Worldpay an opportunity to quickly expand into large markets, such as Brazil and India, where FIS already has a presence.
2. This January, Fiserv has agreed to acquire First Data for approximately $22 billion. Management thinks the new entity, after realizing significant revenue and cost synergies, will generate $4 billion in free cash flow by 2022. Like the FIS acquisition of Worldpay, this new company will feature a huge market share in issuer processing, with First Data also having a large presence in merchant processing, especially with its popular Clover platform.
3. In January 2018, Thomson Reuters sold a majority stake in its financial and risk segment to investors led by Blackstone Group for more than $17 billion. The business, rebranded as Refinitiv after the conclusion of the deal, competes with the infamous Bloomberg terminals by providing financial data on an open platform to its customers. Most of the cash was used by Reuters to pay down debt and authorize a large share buyback program. 
4. Moving further, there is another deal from 2019, when Ultimate Software Group was acquired by private investors for almost $11 billion. Ultimate Software provides a cloud-based, software-as-a-service (SaaS) suite of human capital management solutions. Before going private, Ultimate Software's revenue, most of it recurring, increased 21% to $304.8 million. Ultimate Software has more than 5,600 customers and manages more than 48 billion employee records in its cloud. The company expects to reach $2 billion in total revenue by 2021.
5. In August 2017, Cincinnati-based Vantiv acquired London-based Worldpay Group for nearly $10 billion. The new entity quickly assumed the Worldpay Inc name. The revenue and cost synergies in the FIS deal (as seen above) are in addition to the cross-selling opportunities and cost savings still being recognized from this deal. The transaction combined Vantiv's large payment processing presence in the U.S. with Worldpay Group's e-commerce and international payment footprint, making for a potent combination.

From the deals above, it does appear that many are defensive moves, specifically taken as a reaction to the disruption that technology is bringing to the financial services industry. That being said, I would not expect this to slow down any time soon.

FinTech revolution is only starting, and we can only guess that the future will bring. It will be exciting for sure!

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P.S. You might enjoy my earlier pieces as well:

?? Month in Blockchain & Crypto | March 2019

?? Month in FinTech | March 2019

?? Lithuania's 10 Years Challenge - from Developing Country to European FinTech Hub

?? Bitcoin is NOT a Currency, and Never Will Be

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About: I am a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at one of the leading alternative banking and payments providers in EEA, I'm an active member of FinTech community and a TechFin evangelist.

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