Berkery Noyes’ Financial Technology report for full year 2016 showed that transaction volume remained about constant on a year-to-year basis. Aggregate value decreased 26 percent, from $65.29 billion to $48.41 billion. Relative to 2014, volume improved 15 percent and value gained 72 percent.
M&A volume in the Capital Markets segment, after rising 43 percent in 2015, declined seven percent over the past year. Four of the industry’s top five deals by value during the year involved major exchange operators in the Capital Markets segment.
Meanwhile, notable Capital Markets deals in 2016 below the $1 billion threshold included E*TRADE Financial Corporation’s acquisition of OptionsHouse, an online stock and option broking company that provides trading platforms for retail and institutional options traders and investors, for $725 million; and Ally’s acquisition of TradeKing, an online brokerage and digital wealth management company, for $275 million.
The Payments segment experienced an 18 percent rise in volume in 2016. Upon examination of value, three of the industry’s top ten largest acquisitions during the year occurred in the segment. “Worldwide markets are rapidly developing modernized credit and transfer infrastructure, adding further growth to an already sizeable market,” said Peter Ognibene, Managing Director at Berkery Noyes. “Ecosystem players are also pushing hard on experimenting with beta technologies particularly associated with mobile telephony, social media and peer-to-peer, digital and crypto-currency.” Ognibene continued, “Key business problems to be solved include fraud detection and elimination, utilization of multiple payment methods, aggregation of as many customer streams as possible, convergence of industry utilization and global growth of electronic payments.”
As for other markets covered in the report, acquisition activity in the Banking segment decreased 13 percent on an annual basis, from 90 to 78 deals. This followed a 45 percent increase in 2014.
“There are several significant drivers impacting the evolution of mortgage technology,” stated John Guzzo, Managing Director at Berkery Noyes. “This includes restoring consumer confidence, decreasing the volume of delinquent loans, stabilizing the debt markets and adhering to new regulatory guidelines.” Guzzo continued, “Mortgage technology vendors and outsourcers offering solutions that provide better quality control, promote process efficiencies, facilitate borrower communication and improve regulatory compliance are in demand by investors and acquirers. Moreover, acquirers are looking for products to round-out their solutions suite and to gain customers and market share.”