The brown cardigan wearing pension world is on the cusp of being disrupted, only they just don’t know it yet.
Retirement savings are often seen as dusty, impenetrable and unsexy. Thinking about retirement prompts thoughts of death and Zimmer frames, both of which, dear reader, are terribly unmarketable to the average pre-retiree.
And while a shroud of opacity has hung over the industry for decades, that veil is now slowly being lifted by companies like Fairr, a German pension fintech recently acquired by Goldman Sachs backed fintech Raisin.
We’ve written about Raisin many times on Daily Fintech, notably its innovative ‘deposits-as-a-service’ model, which is upending traditional banking in Europe. Moving into the €12 trillion pension market is a natural segue for a savings business, and no doubt will provide significant additional revenue per user.
Fintech mergers, like Raisin and Fairr, may indeed end up being more common than bank-led acquisitions of fintechs. According to data from Dealogic, deals in the space reached a ‘record high’ in 2019, with a total value so far this year of $116.6 billion. Given there’s still 4 or so months to go, that number looks set to head even further north.
Of course, just what gets classed as a ‘fintech’ deal could be seen to skew the data. Counted in the 87 deals done so far include Fidelity National Information Services’ $43.3 billion acquisition of Worldpay, Fiserv’s $39.4 billion purchase of First Data and Global Payments’ $26.2 billion buyout of Total System Services.
Earlier this month US fintech Credible was acquired by Fox Corporation for $585 million, while Australian advice technology business Midwinter, was acquired by global wealth solutions business Bravura.
Build, buy or partner will be the catchphrase ringing loud and clear through many organisations in the coming 12 months – both in the incumbent and the emerging category. As fintech reaches relative technical maturity, and traditional business models unravel at an even faster pace, some may finally find the market coming towards them. For many it will represent a nice change of pace, compared to years beating the noisy innovation drum themselves, only to have had it fall on deaf corporate ears.
Perhaps new VC models will emerge, less interested in seeding new business models, but more interested in facilitating fintech M&A inside their portfolios, or between venture firms? Given 1 + 1 = 3, it’s rather strange this doesn’t already happen, purely as a risk management strategy. Oh well. You can lead a horse to water but you can’t always make it drink.
Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.
I have no commercial relationship with the companies or people mentioned. I am not receiving compensation for this post.
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