The Top Financial Technology M&A Trends for Q2 2023

The proliferation of Generative AI and Software as a Service (SaaS) platforms have emerged as transformative forces and fundamentally altered the financial technology landscape.

According to the latest research, the market for AI in Fintech will reach $31.71 billion in 2027 and is being applied in several different use cases, such it is currently being used for automation purposes, to help financial institutions detect and prevent fraud and offer tailored recommendations for investment strategies.

In this article, we review how transformative technologies such as generative AI and the prominence of Software as a Service (SaaS) platforms have contributed to the rising levels of financial technology M&A activity in the second quarter of 2023.

InsureTech Strongly Influenced by latest Technology Trends

In an era where technological innovations are redefining industries, the InsureTech sector stands as a prime exemplar of transformation driving by cutting-edge advancements. At the heart of the InsureTech revolution lies the extraordinary potential of machine learning algorithms. These digital sentinels possess an uncanny ability to decipher intricate patterns within vast swaths of data, revealing “red flags” that signal potential fraudulent claims and previously elusive risk management insights.

By automating the detection of anomalies, these algorithms liberate insurance professionals from labour-intensive tasks, affording them invaluable time to delve into the nuances of complex cases that demand human expertise. Consequently, high-volume, low-cost insurance claims, once viewed as administrative burdens, are expedited, allowing skilled knowledge workers to focus on the intricate realm of claims adjudication and the meticulous pursuit of fraud detection.

Companies that harness the potential of new-age technologies to birth innovative insurance products, delve deep into the reservoirs of cognitive learning, and curate tailor-made customer experiences are poised to emerge victorious in the ever-evolving realm of AI-infused insurance.

A testament to this ethos is the recent acquisition of I-Engineering, an avant-garde specialist in business process automation, multi-market comparisons, policy management cycles, and automated marketing software. This strategic acquisition by XDimensional Technologies exemplifies the art of seamlessly weaving technological prowess into the intricate tapestry of insurance operations.

Chris Brooke, M&A Advisor in the Financial Technology space says:

“As SaaS platforms create unprecedented scalability, generative AI platforms unveil hidden insights, and InsureTech reshapes the insurance landscape, M&A transactions in this dynamic space signify a collective commitment to chart uncharted territories. Each deal signifies a bold step toward reshaping the future of financial technology.”

Rising Investments in Generative AI platforms

Investments in generative Artificial Intelligence (AI) and Machine Learning (ML) platforms that deliver customer engagement, digital transformation, risk and compliance and cybersecurity has become one of the main areas of focus for M&A and investment in 2023.

Payments, banking, and insurance players are eager to understand AI’s potential to revolutionise the financial services industry, which is why the second quarter of 2023 saw the payments, banking software and Insuretech subsectors experience the most deal activity. During this period, the payments subsector accounted for 20% of deals, banking software accounted for 17% and InsureTech accounted for 12%.

Generative AI has also been used to assist with fraud prevention, with GPT3’s model being trained to identify fraudulent behaviour and identify emerging threats. EY recently announced a collaboration with Microsoft to develop EY Intelligent Payroll Chatbot as part of the Next Gen Payroll Platform, to modernise tax and payroll systems.

Acquisitions in this vertical include Targens, a leading provider of consulting and software solutions intended to serve financial institutions with future-oriented and disruptive technologies, who were acquired by GFT Technologies.

ESG Market Meets increasing Demand from Financial Institutions

Large vendors are dominating the ESG data market, which is growing at scale to meet the increasing demand from financial institutions and to meet regulatory requirements. This is in response to financial services firms seeking to better understand and justify their ESG exposure in both existing and future investments.

Financial institutions with strong ESG propositions are seen as enjoying a competitive advantage, which is reinforced by a strong push from regulation. ESG data markets have evolved for financial services, as the need for ESG data increases. These services are providing financial institutions and investors with a way of tracking and communicating ESG KPIs, including their carbon footprint, allowing them to meet a range of sustainability requirements and manage risk.

Acquisitions in this vertical include that of Greenstone +, a leading developer of business software designed to manage sustainability and environment, health, and safety data. The company’s software calculates greenhouse gas emissions, set targets and reports against multiple global frameworks, and automatically tracks and calculates the associated carbon emissions using recognised international standards. They were acquired by EHS software developer Cority, via its financial sponsors.

Software-as-a-Service Platforms on the Rise

The second quarter of 2023 has seen an increased interest in financial technology SaaS platforms. These platforms enable banks and fintech companies to rapidly develop and deploy digital banking services, often using pre-built modules and APIs. This reduces the time and cost associated with building bespoke digital banking solutions, enabling banks to focus on delivering high-quality services to their customers.

Acquisitions in this vertical include that of TTMzero, a provider of business processes automation technology intended to improve financial modeling, by United Fintech. Another notable transaction in this space was Hg Capital’s buyout of GTreasury, Operator of integrated SaaS treasury and risk management solutions intended for the digital treasurer. It is also notable to mention the recent increase in SaaS M&A activity in the RegTech sector, with acquisitions such as Cleversoft Group, Pliance, Paragon Data Labs and LumaTax all happening in Q2 2023.

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We can help you identify strategic acquisition targets, explore potential sales processes and assess market opportunities in the financial technology space. By booking an M&A consultation with us, you’ll gain valuable insights and tailored recommendations specific to your organisation’s goals and objectives. Book a consultation with one of our Financial Technology M&A Advisors here.

Author: Chris Brooke


Highly-experienced M&A advisor with a particular emphasis in the Fintech sector, market data and analytics including ESG (Environmental, Social and Governance) software and data globally; assignments include working with leading privately held and listed businesses covering the Fintech, market data and ESG spectrum. In my career spanning more than 25 years, I have advised on Fintech M&A transactions in over 17 countries throughout the world. I work with both buyers and sellers of businesses in Fintech.

I held senior positions in business and corporate development, marketing, and product management in several Fintech companies prior to Goldenhill.

If you are an owner or senior executive of a Fintech business interested to discuss how M&A could help you accomplish your objectives – please get in touch.