Why fintechs are buying up legacy financial services companies

Oh, how the tables have turned.

It used to be that if you were a fintech startup or, for lack of a better term, a digitally native financial services business, you might be eyeing an acquisition from an incumbent in the industry.

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        It used to be that if you were a fintech startup or, for lack of a better term, a digitally native financial services business, you might be eyeing an acquisition from an incumbent in the industry.                   </blockquote>
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But lately, fintech upstarts are the ones doing the acquiring. Over just the last year or so, we’ve seen:

In February 2020, LendingClub announced plans to acquire Radius Bank in a cash-and-stock transaction valued at $185 million. The deal closed in February 2021, leading to a very quick and surprising second-quarter profit.
In March of this year, SoFi agreed to acquire Golden Pacific Bancorp (GBP) for about $22.3 million in a deal that was designed to accelerate its acquisition of a national bank charter.
Earlier this month, blockchain-based lender Figure Technologies agreed to merge with mortgage firm Homebridge Financial Services, which has 180 retail branches and funded more than $25 billion in home loans in 2020.
And last fall, fintech startup and challenger bank Jiko acquired Wadena, Minnesota-based Mid-Central National Bank in a deal that took years of due diligence and whose sales price fell in the range of a Series A round, according to the founder.