M&A: 2022 Banking Industry Survey

Understanding the slowdown in big bank deals

The 2022 KPMG State of Banking Survey features insights from 100 senior executives. This article shares the findings related to M&A activity in the banking industry.

Understanding the slowdown in big bank deals

As is the case across the financial services industries, it has been a relatively slow period of activity in banking M&A for the past few quarters, and our respondents said they do not foresee much of a change over the course of the next three years.

More than 80 percent have a low to moderate M&A appetite. Only 19 percent said have a high M&A appetite.  None said they are seeking to be acquired, although they said they could be an M&A target.

KPMG transaction services partner Timothy Johnson expects a “constrained pace’’ in bank M&A activity in the near term. If banks, in fact, move ahead with a merger, Johnson said, “fit, culture, and systems integration are key to improving the chances of success.”

Moderate M&A appetite

Low M&A appetite

High M&A appetite

Action steps

Alliances with fintechs may be where the action is in the months ahead, Johnson said.  Even though scale and efficiency needs are pressing in today’s industry, and many institutions require new technology capabilities, Johnson and his colleagues said an uncertain regulatory approval process and timeline has dampened M&A enthusiasm.

Though there is general agreement that mergers of equals may benefit most customers, the uncertainty of the regulatory approval process from the current administration may be the most likely reason for the M&A slowdown.

Still, there is no slowdown in banks’ focus on acquiring more tech-savvy customers, which may prime the engine for fintech collaboration. Consequently, connecting with fintechs at scale is a significant operational challenge, which “requires rethinking (and reinvesting in) traditional business development functions,’’ according to KPMG’s Roberts. Potential fintech initiatives could include in-house fintech accelerators and investment funds, innovation hubs, and investment in an application programming interface infrastructure to enable more rapid, open architecture partnership models.

Contact us

Timothy Johnson

Timothy Johnson

Financial Services Industry Leader, Deal Advisory, KPMG US

+1 312-665-1048