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Risk Assessment

Is M&A the Best Way Forward in the Recovering Banking Sector? Thought Leaders Discuss

Until 2018, the impact of the financial crisis of 2007-08 was visible in the US banking sector. Banking mergers and acquisitions had become limited, and the sector struggled to grow. However, in 2018 banking M&A witnessed recovery and prepared for substantial growth over the following years. In early 2020, this growth was suddenly interrupted by the advent of the COVID-19 pandemic.

As industries across the world attempt to recover from the aftermath of the COVID-19 pandemic, experts forecast growth for the recovering banking sectors across the world as well. Banking M&A has recently become crucial due to the increasing need for investment in technology and digital capabilities, and the various regulatory changes. Prior to the pandemic, consolidation had recovered to levels that were last seen before the financial crisis.

After the initial staggering impact of the pandemic, all industries have started preparing for recovery and are attempting to adapt to the new normal of the post-COVID era. Similarly, banks are on the path to recovery, and M&A is one of the most effective and crucial ways to recover successfully. Banking M&A is a challenging process and requires appropriate planning and unparalleled M&A strategies.

In this article, Infiniti Research experts discuss the impact of the COVID-19 pandemic on banking M&A. Additionally, as banks return to banking M&A with renewed motivation, it is important to be aware of the potential challenges, and the ideal way to approach this process and the difficulties encompassed. Therefore, this article details the significant upcoming challenges and the role of appropriate M&A strategies, as highlighted and discussed by Infiniti’s M&A support experts.

Attempting to recover from the aftermath of the COVID-19 pandemic through banking M&A? To learn how Infiniti’s M&A strategies can help you assess, identify, evaluate, and choose the ideal consolidations, request a FREE proposal.

Impact of COVID-19 on Banking M&A

With the rising number of cases in the United States and declining GDPs worldwide, all industries suffered substantial losses. Similarly, banking M&A saw a rapid decline in valuations and total shareholder returns. Additionally, boards and CXOs have shifted their focus to maintaining business continuity and stabilization of current businesses.

Further, the uncertainty of capital flexibility and losses, and the duration of the economic pressure has made M&A unappealing to buyers. In the instance of major distress due to factors such as capital pressure or material risk of failure, struggling organizations may need to sell. Apart from extreme measures, however, selling is not the ideal option in a struggling economy.

However, as banking M&A increases,  several trends are expected to surface. For instance, the rising need for fintech and digital capabilities, accompanied by the potential lack of funding for new fintech firms with limited market experience, may promote consolidation between traditional financial institutions and fintech firms. Additionally, the sudden upsurge in demand for digital platforms in every industry due to the pandemic will promote the need for banks and fintech companies to consolidate.

As these and other market trends begin to influence the recovering market, banking M&A is expected to recover within 2020 marginally. However, the COVID-19 pandemic will have a lasting impact on the foreseeable future of the banking sector.

Speak to our experts to know more about the impact of COVID-19 on your industry, the ideal path to recovery, and adapting to the new normal.

What companies need to prepare for during Banking M&A

As the banking sector starts on the path to recovery, the banking M&A process is set to face various challenges and opportunities. Although there will be a steady increase, the industry is expected to take a substantial amount of time before it has made a complete recovery. After a sudden impact like that of the COVID-19 pandemic, banks and fintech firms should be prepared for various factors in banking M&A to ensure successful transactions and avoid further losses.

Banking M&A + M&A Strategies

Therefore, Infiniti’s M&A strategy experts identified the following four crucial factors for banking M&A participants to prepare for:

Staying Ahead of Regulations

Changing political, social, and economic environments have previously posed substantial challenges for the financial and banking sectors. As 2020 proceeds, the political and economic scenario of the US continues to be precarious, and that directly impacts the regulatory environment of all industries. In the case of the banking sector, particularly, potential political regime changes can easily alter the future of all industry players and M&A transactions.

When strategizing for M&A transactions, participants need to prepare for possible regulatory changes and the impact of a new political regime on the economic environment. Additionally, choosing a partner that will be beneficial and supportive through changing factors is highly crucial and contributes significantly to a successful M&A. Therefore, key players have recently shifted their focus to acquiring professional assistance in developing M&A strategies. This helps ensure effective and successful strategizing and implementation of consolidations.

Accepting the New

The need for technological and digital capabilities has increased substantially over the last decade. Industries and consumers have become increasingly dependent on technology to carry out all major commercial transactions and activities. This has created the need for traditional financial institutions to consider and execute consolidations with financial-technology (fintech) firms. With increasing M&A transactions between traditional banks and fintech firms, the banking sector is headed on a path to digitization. However, although it is widely accepted that it is time for banks to shift from their legacy systems to modern fintech is necessary for survival and proliferation, many institutions struggle to make the change.

As the term legacy suggests, these systems are highly dated and a core part of the traditional banking systems and brand identities. However, they no longer fulfill the requirements of the modern consumer. Therefore, traditional financial institutions must prepare to consolidate with their agile fintech competitors and accept the new wave of technology. Adapting is crucial to survival, and changing to modern, adaptable, and consumer-centric systems is one of the essential changes for the banking sector.

Understanding Cultural Integration

During integrating, two independent organizations, boards, and CXOs often fail to account for the impact on their employees. This has led to a high failure rate in banking M&A in the best. Therefore, as companies work towards new M&A transactions, it is crucial to account for employee sentiment towards the consolidation process and ensure clear communication with all company employees. The right M&A strategy helps banks clearly communicate with and adequately train their employees for the new changes in the organization.

It is also important to ensure that employees on both sides of the deal agree with new policies regarding compensations, benefits, and organizational culture. Ensuring appropriate cultural integration can make or break an M&A. Proper cultural integration helps increase employee satisfaction and promotes efficiency and productivity. In some cases, organizations create an integration management office, with an integration CEO that helps manage every segment of the integration process, ensuring appropriate cultural and employee integration.

A Slow Path to Recovery

Although banking M&A is expected to recover through the remainder of the year, this process will be long-drawn and limited for a certain period. Currently, the scale is critical, and many struggling financial institutions and fintech firms will require M&A transactions to survive through the pandemic.

However, the economic impact of the pandemic has sent tremors through various segments of the banking and financial services sector, leading to an increased focus on short-term business continuity and reduced attention towards major investments such as M&A transactions. Therefore, companies must prepare for a slow and steady recovery and the possibility of limited options and partnerships. The right M&A strategies can help banks and fintech firms identify and execute the ideal M&A transactions even in a slow market.

Request more information and learn how Infiniti’s M&A strategies can transform the challenging banking M&A process into an attainable target for your organization.

How the Right M&A Strategies Can Help in Banking M&A

As financial institutions enter this phase of recovery, and banking M&A makes a long-awaited return, M&A strategies can be the major difference between successful and unprosperous consolidations. Infiniti’s experts help financial institutions overcome the challenges of banking M&A while maintaining business continuity and enabling a successful merger.

Three ways in which Infiniti’s M&A support and M&A strategies can help financial institutions in these challenging times are as follows:

  1. Organizations can create systematic and programmatic approaches to the process and enable the continuous development of potential M&A candidates.
  2. Boards, investors, and CXOs are offered data-driven insights and advice through the M&A process, with unparalleled guidance and research support.
  3. Financial institutions can assess all potential opportunities, identify the ideal partnerships for their organization, and make well-informed decisions about their future.

Recovering from the COVID-19 pandemic is expected to be a long-drawn and challenging process for all industries. However, with the right assistance and guidance from Infiniti’s M&A support experts, financial institutions can develop and execute successful M&A strategies that will boost the recovery process of their organization and the financial services industry.

Banking sector

Reducing Annual Operating Cost by $7 Million for a Banking Sector Client through Market Intelligence Engagement

Banking Sector Overview

The global banking sector is expected to witness positive growth over the coming years as major developed markets are experiencing increasing commercial banking activity as a result of strong economic performance and positive expectations. Despite this stable growth, the evolving customer expectations, lower return on investments, rising competition from FinTech providers, and regulatory pressures are increasing challenges for companies operating in the banking sector. As such, companies in the banking sector will need to revamp their traditional banking models in order to keep up with the fast pace of changes in the industry.

Recent studies show that around 70% of companies in the banking sector have adapted a customer-centric business model. So, have you revamped your traditional banking model to meet the need of your customer segments? If not, our market intelligence experts can help. Request a FREE proposal.

Business Challenge

The client is a banking company based out of North America.

Increasing competition from FinTech companies made it difficult for the client to adjust quickly to the changes, not just in technology but also in operations and other facets of the industry. Also, owing to the evolving regulatory requirements, the banking sector client had to spend a large part of their discretionary budget on being compliant and on building systems and processes to keep up with the escalating requirements. In addition, due to the client’s inability to keep pace with the latest technologies and trends, they faced difficulties in delivering the level of services that consumers demanded, especially with regard to technology. As such, they wanted to thoroughly analyze the US market changes, competitors’ strategies, and industry developments to revamp their business models accordingly. To do so, they approached the experts at Infiniti Research to leverage their expertise in offering market intelligence solution.

Other major challenges that the banking sector client wanted to tackle by leveraging Infiniti’s market intelligence engagement were:

  • Changing landscape for lending and payments mechanisms
  • Regulatory compliance hurdles
  • Falling net interest margins

Traditional, time-intensive market research cannot help you to keep up with the needs and demands of a more demanding, smarter world. Contact us to know how our custom market intelligence solutions can help you gather data-driven insights into a new or existing market.

Our Approach

The experts at Infiniti Research followed a four-phased approach that involved:

Market research study to analyze the current market landscape and identify the right scale of opportunities.

Customer intelligence study to analyze customers’ changing needs and demands. This phase of the engagement also involved analyzing reasons for customer churn.

Market scanning and monitoring to assess and predict changes in emerging regulations in the US banking sector.

Competitive intelligence engagement to compare the client’s offerings with that of the top companies in the US banking industry.

Results Obtained

The insights obtained from Infiniti’s market intelligence engagement helped the banking sector client to assess local competition, evaluate the right scale of opportunities, understand the impact of emerging regulations, and analyze the changing landscape for lending and payments mechanisms.

By understanding customers’ needs and demands, they were able to adopt a customer-centric business model. This helped the banking sector client in delivering the level of service that consumers demanded. Identification of security and operational threats in advance helped them to build a more advanced information security system. This subsequently helped them to enhance customer experience and acquire new customers.

By identifying the cost-effective technologies in the US banking sector, the experts helped the client to reduce manual processing through automation of critical tasks. These improvements enabled the banking sector client to boost customer satisfaction and retention, while at the same time reduce annual operating costs by $7 million.

To sustain a leading edge in today’s competitive marketplace, companies in the banking sector will need to keep pace with the market changes and differentiate their service offerings. Request for more info to know more about our services for companies in the banking sector.

The Future of Fintech: What Players in the Industry Must Do to Flourish

The global investment in fintech has increased manifold over the last decade, which clearly goes out to show that fintech in banking services is the next big thing in the financial industry. Up until a few years ago, fintech was considered to be one of the biggest competitors for banking companies. However, over the years, banks have come to terms with the fact that incorporating fintech in banking is the way ahead to thrive in the market. The extent to which fintechs will face opportunities or challenges in the future is unclear. Though financial technology has made leaps and bounds, it is important to note that they are still in the incumbent stage. The upward trend in financial technology is fueled by the need to solve the changing requirements of today’s digital consumer and adapt to the way they prefer to transact. The big question here is how companies in this sector are going to flourish in the future of fintech by meeting the changing customer demands.Ask An Analyst_IR

Future of fintech 

Improving customer experience

The future of fintech will heavily rely on creating exceptional customer experiences. Technology has revamped the way consumer do things and is one of the main reasons why financial institutions are considering implementing fintech in banking. The future of fintech will revolve around offering customers with highly targeted products and services that are designed to fulfill their needs. Modern customers, especially the millennials, are more attracted to such offerings rather than what is available at traditional banking facilities. Though technology plays a major role, customer service will be the foundation underlying the success of fintech in banking services.Request Proposal

Forecasting customer requirements

The application of fintech in banking will require tapping into technological innovations such as blockchain and artificial intelligence. These technologies are useful in unbundling traditional financial services and providing better user experiences. The future of fintech will largely revolve around innovative solutions ranging from payments and lending to robo-advisor services and trade data management. And this ability to collaborate and bridge the gap between the palate of services businesses and consumers’ need is one of the key reasons why fintechs are thriving.

Mergers and acquisitions

Fintechs are still in their incumbent stage. More financial institutions are increasingly considering how the use of fintech in banking through technologies such as blockchain, AI, and mobile payments is viable. Several experts predict that in the future, we can expect to see several mergers and acquisitions in the financial sector to prevent the setup cost incurred for financial technology. Banking companies will not only look at acquiring fintechs, but are also focused on building partnerships with emerging fintechs who will supporting their growth and development.Contact US

Infiniti advantage

Infiniti Research is a leading provider of market intelligence solutions for the financial industry.  Our solutions not only help in understanding the financial scenario in the market but also aid in taking the right steps to adapt to the changing market trends.Our market intelligence team follows highly tailored and proven methodologies to understand the various characteristics of the financial landscape and provide succinct answers for business decisions in areas including financial market risks, trends, competitor analysis, benchmarking, and customer segmentation.

market opportunity

Market Share Analysis For a Leading Fintech Company Helps Boost Their Market Growth and Increase Profit Margin

Infrastructural and regulatory issues are posing as some of the biggest challenges in the growth of the fintech companies. Click To Tweet

In the wake of global digitization, banking sectors are resorting to their in-house technological innovation to cater to customer’s quest for digital transactions. This has led to dwindling dependence on the fintech companies; thereby, curtailing their marketing scopes. On the other hand, the fintech companies are forced to allocate more investments and resources to augment their product portfolio. However, the actual product performance in the market fails to compensate for this product innovation investment subsequently resulting in severe market share loss for these companies. Moreover, fintech companies are relatively new in the market and do not have in-depth information on the regulators and governing bodies they should pledge their adherence to. Request ProposalThis lack of information leads to the delay in obtaining a license and increases the possibility of these companies being slapped with hefty fines.

Business Issues

  • The client: One of the leading player in the fintech companies market

The client- one of the reputed fintech companies approached Infiniti to conduct a market share analysis to gain meaningful insights into their current market position in the global fintech industry space. Additionally, they wanted to gain insights into their growth rate, profitability, cost structure, and distribution channels across the industry. The market share analysis engagement was also expected to help target customer base and consequently lead to optimal investment return and a maximized EBITDA margin.

How Can Market Share Analysis Help Fintech Companies?

Infiniti’s market share analysis solution helps fintech companies to stay abreast of the critical market scenario and keeps them informed about their current market position. These factors are imperative for an undisruptive growth of the fintech companies. The market share analysis also helps companies explore the brand reputation and accordingly make adjustments to the brand needs. In addition to this, a robust market share analysis solution highlights the performance benchmarks to evaluate the brand goal progress in the future.

Summary of Our Fintech Company Market Share Analysis

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Client Journey

Infiniti Research undertook comprehensive primary and secondary research methods while conducting the market share analysis. The research involved interviews and discussions with stakeholders in the fintech industry space. Infiniti’s market share analysis experts also analyzed the inputs gathered from a vast array of resources such as company presentations, industry forums, and paid industry databases. This offered the client a comprehensive overview of the latest fintech industry trends.

Solution Benefits and Business Impact

This market share analysis engagement from Infiniti helped the client gain real-time insights into their market position that also highlighted the advantages and disadvantages that they possess when compared to their peers in the fintech industry space. The solution also helped the client understand customer interests and accordingly target their consumer Get More Infobase. The client was also able to design a progressive and predictive market strategy which helped them gain an edge in the competitive fintech companies market.

Fintech Companies Future

The emergence and thriving of the fintech companies is an inevitable phenomenon in the age of digitalization. A phenomenon which is gradually becoming the podium of all financial transactions. As convenience and accuracy are some of the benefits offered by fintech companies, customers are now more inclined toward fintech based transactions. Additionally, major financial institutions are forming partnerships with the fintech companies to augment their operational efficiency and respond to customer demands. Furthermore, it can be safely said that the fintech companies will grow in tandem with the advancement of technologies.

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Market Entry Strategies

Challenges That Fintech Companies Need to Be Prepared For

The growing importance of innovations coupled with the extensive use of technologies has changed the face of banking worldwide. Financial technologies (Fintech) have become an integral part of banking, and nowadays banks have started to compete beyond financial services due to the increasing competition from nonfinancial institutions. The Fintech industry has grown massively over the past couple of years. Fintech companies pose a strategic threat by potentially disrupting the financial sectors and services, particularly in areas such as lending, payments, wealth management, and property and casualty products. Fintech companies have quickly moved on from their initially modest offerings in back-office operations into areas such as trading, investment, retail banking, thus emerging as direct competitors in the industry. Though the fintech revolution has been in full swing for the last few years, there are a number of complex challenges that fRequest Proposalintech companies are yet to resolve:

  • Regulatory constraints

The fintech industry is quite different from the traditional banking setup. Fintech companies are often unaware of which regulators and governing bodies they have to adhere to. This means that these companies often aren’t even aware of the regulations that they must comply with. This problem can result in delays in getting license on-time. Also, the possibility of getting charged with hefty fines are also high. To add on to this problem, since the financial crisis of 2008, governing bodies have created much more stringent regulations that the financial industry must follow.

  • Difficulty in attracting investors

Fintech companies were highly successful in raising funds until 2016. However, from the second quarter of 2016, this trend showed a major dip. One of the main reasons for this was banks and other financial institutions starting their own fintech operations and reducing the dependence on fintech companies. Traditional banks may have been seeing companies in the fintech industry as rivals. However, banks and other financial institutions aren’t aware of the advantages that the fintech companies can provide for them.

  • Limited understanding

Since the fintech companies do not follow those crystal-clear guidelines that were previously mentioned, there’s obviously a lot of misunderstanding in the exact procedures which must be followed in the fintech industry. Furthermore, the general public has their skepticism about relying on fintech companies rather than traditional banks. The fintech revolution has the potential to disrupt the financial industry, but until more people become educated about fintech, some of the misconceptions will restrict companies in the fintech industry from realizing their full potential.

  • Security challenges

The financial sector deals with sensitive information about various individuals and enterprises. With the emergence of fintech, a plethora of data has become available in digital formats, which makes it easier to analyze and generate insights, but at the same time also makes the data more susceptible to security breaches. This is one of the main factors fueling skeptics to rely on fintech companies.


To know more about the opportunities and trends in the fintech industry

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4 Ways You Can Solve Fintech Challenges with Inbound Marketing

Fintech is hands down one of the most significant financial industry trends of the past decade. The growing inclination towards cashless economies and the rising need of financial companies to reach out to people across different geographical terrains are some of the basic factors that are fueling growth in the fintech industry. Fintech-powered technologies have redefined almost every segment of the financial sector, ranging from insurance and investment to payment gateways across continents. The few that remain are expected to taste the power of fintech over the years to come. However, this promising sector is not entirely free of challenges. Surprisingly, a few of these problems can be easily resolved with the help of inbound marketing? Wonder how company-created Internet content to attract customers (inbound marketing) can help negate fintech challenges?Request Free Proposal

Customer-centric digital marketing

One of the key fintech challenges in emerging economies is the need for customer-led product development. For fintech companies, the majority of their customer journey takes place on a digital platform. Customers are increasingly using digital devices to search for financial products, mobile apps and payment interfaces for faster, safer and seamless transaction experiences. This makes having a responsive website design, fast loading time and user-friendly interface an imperative for fintech companies. Inbound marketing techniques such as SEO, content distribution strategy based on competitor analysis, and keyword research prove helpful to augment the search potential of fintech brands.

Lower cost per lead

Traditional marketing techniques come with a high price tag, which could quickly reduce the profit margins of companies. Furthermore, conventional marketing methods are not precision-targeted to reach the prospects in the fintech sector.These factors would only add-on to the fintech challenges. Inbound marketing techniques such search engine optimization and social media optimization can help companies in this sector to reduce cost per lead while providing them better quality leads with a higher probability of conversion.

Improved CRM

Inability to curate an appropriate customer relationship strategy is one of the fintech challenges most companies in the sector face. Using inbound marketing, fintech firms can enhance their CRM strategies. It allows empowering customers to do the talking and shift the focus from customer relationship management to customer-managed relationship. When customers become proactive and engage in conversations on social media platforms, share feedback on products, ask questions and offer an opinion on online surveys they become more connected to the company. Also, millennials are accustomed to near real-time user experiences and want things on demand. Hence, inbound marketing on social media platforms and websites with chat boxes for instant responses are the way to go for fintech companies.

Cultivates informed customer-base

Mistrust and lack of transparency towards new age financial enterprises and fintech brands are one of the most common fintech challenges. This stems from customers’ lack of product knowledge and an inherent assumption of payment banks, online money transfers, social media banking and digital wallets being rocket science. This calls for fintech brands to augment the search potential of their websites, leverage mobile app store optimization for app marketing using inbound marketing to enable users to explore new age financial products.

To know more about how inbound marketing can help overcome fintech challenges

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