Fintechs weigh benefits of banking licence versus M&A

Author: Jimmie Franklin | Published: 26 Jul 2019

Fintech companies are weighing up the benefits of obtaining a banking licence in the current political climate or going one step further and merging with a bank.

This would contrast with previous trends, as established banks such as Goldman Sachs and Societe Generale both acquiring more than one fintech start up in 2018.

"The first-mover fintechs have got firepower from funding rounds, built scale and tested their technology," said White & Case partner Hyder Jumbahoy. "The next logical step is to start bringing their service providers in-house."

Jumbahoy suggested one way of doing that would be joint venture partnerships with service provider banks. "The next logical step, if you want a banking licence and you can afford it, is to buy an existing bank," he added.

KEY TAKEAWAYS

Players in the fintech industry are divided over whether companies should begin buying their banks;Some fintechs are "effectively new banks" without the...