Fintechs are building out internal M&A teams

After a series of IPOs and significant fundraising deals, fintechs are poaching junior bankers to evaluate and negotiate M&As internally. Banking giants increasingly see fintechs and other startups as talent competitors.

Why should we care?
The development of in-house M&A teams doesn’t represent the same sort of scope creep facing SoFi, but it does demonstrate how fintechs are slowly becoming more like traditional banks through even relatively small-scale staffing changes. However, depending upon a group of junior bankers—that is, a collective with relatively less experience than those found in bulge-bracket firms—carries its own risks. Without old hands at the reins, fintechs may agree to less-than-favorable or overvalued deals that carry hidden long-term costs. At this juncture, though, most in-house deals are so small that investment-banking giants wouldn’t cover them anyway; with that in mind, this staffing shift may instead portend the proliferation of smaller M&As—what Business Insider dubs “smaller, frontier dealmaking and investing.” The fintech landscape may become a more dynamic chessboard over time, with pawns swallowed up by the big players much sooner in their life cycle.