M&A trends in financial services: 2023 outlook

A more disciplined approach with portfolio optimisation, transformation, and digitalisation at the core of M&A activities

Marc Huber Partner, Deals Financial Services, PwC Switzerland

Marc Huber
Partner, Deals Financial Services, PwC Switzerland

The financial services industry is undergoing profound change and needs to upgrade its business models. Globally, we expect deal activity to pick up in 2023, but due diligence remains crucial. And what is the situation in Switzerland? Find out more in this blogpost.

Dealmakers in the financial services (FS) sector face major challenges: the current uncertain macroeconomic market environment (including slowing GDP growth, inflation, higher interest rates, and disruption resulting from the war in Ukraine), the fallout from the recent cryptocurrency meltdown, sustained pressure from regulators, and a shortage of highly skilled talent. Against this backdrop, M&A will continue to be a driver of transformation in the FS sector as incumbents look for strategic partnerships and consolidation opportunities to improve their digital capabilities.

Transactions have become more complex, which is forcing FS dealmakers to consider different scenarios and create robust value creation plans. The greatest M&A opportunities in FS are likely to be found in customer-led transformation, supply chain, operations, cloud, finance transformation as well as environmental, social, and governance (ESG). While we expect the M&A market to remain difficult in 2023, we believe that the FS sector will offer many opportunities for dealmakers to achieve their strategic goals, albeit in a more disciplined and cautious manner.

As dealmakers focus on different ways to create value, due diligence processes before contract signing are becoming more extensive and profound (covering strategic fit, workforce quality and ESG factors, in addition to traditional financial performance, tax, IT and operations). Post-transaction implementation and the resulting transformation continue to be of utmost importance.

Global M&A trends in the financial services industry

Asset and wealth management (AWM)

The AWM sector continues to evolve, and companies seek to leverage transactions to fight slowing revenue growth and shrinking margins. In the asset management space, we expect dealmaking to be driven by a chase for scale to address margin pressures and by the need to acquire new capabilities to access new segments and markets. Furthermore, asset managers – especially in the USA – may put out their feelers for targets with ESG capabilities and assets, and they will have to include fintech to survive.

Against the backdrop of wealth management companies sticking to local characteristics and business models, some trends are valid for all. Investment appetite may be driven by the desire to expand international and local presence and create hubs in strategic markets, especially in Europe, to increase the number of HNWI (high-net-worth individual) clients. Some of these deals will be backed by private equity firms, which is driving M&A activity further.

AWM companies could generally consider strategic alliances with other market players, e.g. in other territories, to complement each other and gain greater market power.

Banking and capital markets

Geopolitical tensions, inflation, and growth-related concerns slow down M&A in banking. However, as digital banking adoption increases, tech capabilities remain critical to M&A strategies. Incumbents are seeking to expand their market position amid disruption from fintechs and non-sector players.

We’re also seeing governments, customers, and shareholders pushing not only for digitisation and modernisation of the industry, but also for ESG-related issues. Traditional players may respond to customer demand for secure and convenient digital banking by acquiring new digital capabilities, investing in cloud technologies, and partnering with digital distribution channel providers.

As consolidation of the highly fragmented industry continues, business leaders are selectively divesting non-core assets in an attempt to reduce complexity. As banks get rid of NPLs to strengthen balance sheets and improve capital ratios, this creates opportunities for distressed M&A.


The new interest rate regime and high inflation strongly impact the performance and the business models of insurance companies. Premiums are lagging behind inflation rates, challenging insurers to raise their pricing at the same pace as inflation. Thereby, the non-life segment is affected more by higher claim costs than the life segment. In addition, changing policyholder preferences may result in higher demand for products supported by higher interest rates, such as guaranteed savings.

Insurers definitely need to accelerate transformation and clearly define their core business to improve their customer value proposition and profit model.

Insurance distribution has remained an area of strong dealmaking in recent months, and we anticipate continued interest in insurance brokerage companies from consolidators and private equity. Also, as the valuations and stock market performance of insurtechs have cooled, they might make attractive targets for established insurance players looking to harness technology, boost revenues, and shape a successful future.

Financial services deal volumes and values, 2018-2022

Bar chart showing M&A volumes and values for the financial services sectors. Deal volumes and values in FS declined by 19% and 46%, respectively, between 2021 and 2022, resetting to pre-pandemic levels.

Sources: Refinitiv, Dealogic and PwC analysis

Between 2021 and 2022, global M&A volumes and values in financial services decreased by 17 and 42 percent, respectively. This is consistent with the broader M&A market, which experienced a record year in 2021 – and then quickly declined. The decline in deal values was greater than the slowdown in activity, partly due to a sharp drop in megadeals (transactions with a value of more than USD 5 billion). From 2021 to 2022, the number of megadeals decreased from 21 to five.

"The ongoing transformation of the financial services sector is far from being complete. Financial services firms will use mergers and acquisitions as a strategic means to acquire digital capabilities, sharpen their core competencies and divest non-essential or underperforming assets."

Marc Huber,Partner, Deals Financial Services, PwC Switzerland

What are the M&A trends in the Swiss financial services industry?

1) FY22 results of private banks are coming short of the record year 2021 – which is also reflected in lower M&A activity in recent months:

M&A activity in the private banking sector has slowed over the course of 2022, and we expect it to remain subdued in the coming year. Nevertheless, we see that there is still substantial appetite for deals and that the activity is likely to pick up once the economic situation stabilises. Buyers are able to take advantage of lower prices than before FY22 and – particularly larger players – push forward with their growth ambitions and (digital) transformation.

2) Fintech shows continuous deal flow – but on a lower flame:

In my last blog, I wrote about an interrupted deal flow in the fintech space compared to the record year of 2021. Nevertheless, significant activity has remained – albeit on a lower flame. This is mainly driven by the interest of international players, corporates, and PE in the Swiss market as well as fintechs being also willing to fund themselves at lower valuations – for lack of other options – and to continue funding their ongoing operations and growth ambitions.

In addition, strategic players have growing appetite for investing in or partnering with fintechs as an alternative to innovation, particularly in their product offering or middle office. Our survey of 30 banks in Switzerland shows that 40 percent intend to invest in fintech within the next two years, although half of them don't have a formal strategy in place yet.

3) The independent asset manager (IAM) industry is currently disrupted by new regulatory requirements:

According to Finma’s latest communication, as of January 2023, 1500 IAMs have applied for the licence (of which 670 have formally obtained the licence so far). A substantial part of the total 2500 IAMs operating in Switzerland have chosen not to apply for a license. It remains unclear how the institutions that missed the deadline of 31 December 2022 will continue to operate. We believe that increased regulation will lead to consolidation and that some smaller players will consider joining some of the larger aggregators. A sector that FS dealmakers should watch closely in the coming months.

4) Continuous deal activity can be identified in consumer finance and BNL markets:

During 2022, a number of deals were closed in the consumer finance sector (e.g. Swissbankers, Byjuno, Credaris), and we see a continuation of discussions and deal opportunities – particularly with regard to smaller ticket sizes.

5) Busy times ahead for global insurance M&A:

Swiss (re)insurers remain active and are among the key players in the global M&A market. However, Swiss involvement is mainly driven by the larger global players involved in cross-border deals. Deal activity involving Swiss (re)insurers in the US (including Bermuda), Latam, and Asia is also expected to remain active as (re)insurers continually look for ways to increase their capital efficiency or seek growth opportunities in developing markets. Run-off transactions are expected to remain attractive, with some highly anticipated larger life insurance deals picking up steam across Europe (such as Zurich’s announcement to sell €21bn AuA to Viridium and French insurer AXA selling off €19bn AuA to Athora). The current inflationary environment is also on everyone’s mind as it represents both an opportunity and a threat for the industry. Consolidators offer insurers the opportunity to offload complex portfolios and simplify their business to achieve much needed cost savings.

2023 has started well and we expect further deal activity. Insurance deals in Switzerland are rather rare and as such, deals with Swiss participation are mainly driven by some of the large players involved in cross-border deals ‒ something we could already see again in early 2023.

Our conclusion: more transformative deals in 2023

FS players need to further transform their business models to meet current and future challenges. M&A is an essential part of this transformational journey, either by acquiring businesses to drive future growth and getting access to new technologies – or by divesting less profitable or non-core businesses to sharpen the operational focus of organisations.

For all the near-term volatility from macroeconomic and geopolitical disruption, we see positive signs for a potential uptick in M&A and for an ongoing or even improved deal flow in the course of 2023. Dealmakers who put great effort into analysing and optimising each deal situation and who act on selective opportunities will be able to shape their own future.


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Our PwC Corporate Finance team has ranked as the Global and Swiss #1 M&A Advisor by Volume for 2022 by Thomson Reuters, Bloomberg and Dealogic.

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