Industry Insiders Signal an Upcoming Boom in Fintech Acquisitions

As last year’s turbulent economic occurrences demonstrated, the days of unfettered fintech innovation and entrepreneurship are behind us. Between looming inflation, tightening regulation, and a cooling of popular enthusiasm for fintech, voices across the industry are forecasting a season of consolidation and acquisitions.

Understandably for such a diverse industry, the signs of consolidation can be ambiguous. Taken individually, the recent beating taken by Affirm (which declined by 70% over the last year) and the ongoing change-up in leadership at firms like Pipe may be isolated incidents. Looked at collectively, however, they point to a pattern that bodes ill for small firms working in the SMB, BNPL, neobanking, and especially Banking-as-a-Service (BaaS) sectors.

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“The entire ecosystem of venture-backed fintechs that were the customers for the BaaS vendors are all sort of shrinking, retrenching, pulling back,” said an anonymous partner from a California-based venture capital firm in a recent interview. “So pretty much every name in [the Baas] category, I think, is an M&A target.”