Robust Growth in Financial Services M&A Driven by Payments, Wealth, and Consolidation

The financial services sector has experienced a significant surge in M&A activity in recent years, with a continued upward trend observed in the first half of 2025. There were 1,125 global financial services deals announced in this period, slightly increasing from 1,106 in the first half of 2024. The sector saw record activity in 2024 with 2,222 deals, and deal values surged in Q2 2025 by 22% from the previous quarter and over 50% compared to the prior year, largely driven by specialty insurance, payments, and capital markets platform transactions. Strategic financial institutions remain active buyers, alongside growing interest from private equity and asset managers attracted by long-term, stable returns offered by financial services assets. Despite a slow market start in 2025 due to macroeconomic uncertainties, deal flow strengthened considerably in the second and third quarters, highlighted by major transactions such as BMO's acquisition of Burgundy Asset Management and Scotiabank’s divestitures in Latin America. Notable large-scale deals globally include Global Payments Inc.'s $24.3 billion acquisition of Worldpay and Fidelity National Information Services’ purchase of Global Payments’ Issuer Solutions for $13.4 billion, emphasizing the robust payments sector M&A landscape. Private equity's role in financial services M&A has expanded, accounting for nearly 20% of deals by Q2 2025. Wealth and asset management, historically dominated by financial institutions, is now a major focus for private equity due to its fragmented nature and the quest for steady revenue streams amid interest rate volatility. Consolidation across banking, insurance, wealth, and asset management continues at a vigorous pace driven by economies of scale and market volatility. Major transactions such as National Bank’s acquisition of Canadian Western Bank and Travelers’ property and casualty sale to Definity Financial underline this trend. The buoyant stock market environment through 2025 has facilitated significant use of share consideration in acquisitions, allowing public companies to leverage elevated valuations to fund large transactions. Thirty-five mega-deals over $1 billion constituted 83% of the total deal value in the first half of the year. The payments sector is particularly active, reacting to the implementation of the Retail Payment Activities Act (RPAA) in Canada, which imposes new regulations on payment service providers (PSPs). Over 1,600 PSPs have sought registration, leading to expectations of further sector consolidation either through exits or acquisitions as smaller players adjust to regulatory demands. Acquisitions within PSPs require regulatory approval for changes in control, adding complexity and potentially influencing transaction timelines amid growing market participation and upcoming access to the Real-Time Rail payment system. Digital assets are emerging as an important component within the payments and financial services space, with regulatory bodies, financial institutions, and private equity showing increasing engagement. The rise of stablecoins to facilitate global payments is predicted to drive M&A activity and strategic alliances. In summary, the financial services sector, particularly in Canada and globally, presents sustained opportunities for mergers, acquisitions, and partnerships. The combination of strong capital bases, steady demand, and evolving regulatory frameworks positions the sector for robust growth. Participants must navigate the complexities of regulated transactions while capitalizing on consolidation and innovation trends.