UKs fintech market is going to see more UKs cashed-up banks buying fintech firms in 2023 #
Digital banking in the UK is expected to evolve rapidly as cashed-up banks are trying to buy fintech firms on the cheap in 2023. Tim Levene, the chief of Augmentum Fintech, assesses that the UK fintech sector should expect a wave of acquisitions this year.
Levene notes that the banks, insurers, and asset managers are “sitting on a lot of cash”, and traditional finance firms are failing the digital transformation. This will most likely cause them to acquire fintechs since the valuations relatively dropped last year.
The price cutback affected fintech startups on almost every stage of fundraising, with drastic decrease in mid- and late-stage valuations.
Deal volume declined by more than 20% across most stages except for series A, which faced a 1% uptick, as the CBInsights report shows.
Now, the median deal size shrank by 50%, which is even lower than the 2020 median. And, in the first quarter of 2023, the situation is unlikely to change and Levene assesses, since the big institutional investors withdraw. The venture capital investments dried out as the market faced rapid interest rate hikes and shuttered exit.
So, the market will most likely see more deals involving fintech firms acquisition by the UKs banks in the near future.