This practice note discusses regulatory considerations and related issues in financial technology (FinTech) mergers and acquisitions. The term “FinTech” refers to a number of different types of services. From digital currency to mobile payments and money transfers, the term encapsulates a variety of online payment services. FinTech also reaches into the financing sector, as both crowdfunding and marketplace lending services have become viable alternatives to traditional financing for certain parties. Additionally, the advent of robo-advisers (online wealth management services which provide automated, algorithm-based portfolio management advice) shows FinTech’s application in the investment advisory space.
While funding levels make clear that FinTech is considered a hot investment, the rapid growth of the industry and the increasingly intricate regulatory landscape can produce pitfalls for even the most savvy and sophisticated of clients looking to make acquisitions in this space. This practice note cannot provide a comprehensive survey of every FinTech service and regulation. Instead, the goal is to discuss, in broad strokes, which technologies have captured the regulators’ attention and what this heightened attention means for buyers in M&A transactions. Specifically, this practice note discusses:
- State Licenses and Bank Charters
- If the Acquirer Is a Bank or Bank Holding Company: Supervisory Approval and Oversight
- Select Oversight and Enforcement Activity
- Targets Participating in Financing
- Targets Relying on Consumer Permissioned Data Sharing
- Targets Acting as Vendors to Financial Institutions
- Targets Providing Payment Services
- Falling into the Security Trap
- When Target May Be an Investment Adviser
- Intellectual Property Issues
- State Data Security and Privacy Issues
- Employment and Labor Issues
- Conclusion
- Related Content
