B&CM M&A Outlook


2021 banking and capital markets M&A outlook

Reset, reimagine, and reengage

Financial institutions are sending clear and strong signals that dealmaking—banking mergers and acquisitions, divestitures, and alternative banking M&A methods—will likely be an important lever as the market recovers from the pandemic. Find new pathways to profitable growth this year by exploring the trends and drivers reshaping M&A in the banking sector.

A snapshot of banking mergers and acquisitions in 2021

After a year of unprecedented upheaval, economic disruption, and political uncertainty, we’re beginning to see the light at the end of the tunnel. With 2021’s global rollout of multiple COVID-19 vaccines, consumer confidence should increase, companies should be more bullish, and economic activity should start to resemble what it was prepandemic. This is an encouraging mix and will bring good news for 2021 banking and capital markets (B&CM) mergers and acquisitions (M&A) activity. In fact, a flurry of dealmaking toward the end of 2020 helped to offset a moribund second quarter and signaled companies’ intent to move ahead despite challenges.

As banks, investment management and wealth management (IM/WM) firms, and financial technology (fintech) companies recover from COVID-19’s financial and operational impacts, some will need time to reset and reimagine their inorganic growth strategies for the next normal. This, and the potential for tax and regulatory changes under the Biden presidency, may hinder banking M&A activity in the early months of 2021, although the potential exists for 2021 to be a record year for M&A activity.

Pent-up demand is very high, and the primary drivers for dealmaking remain intact: the pursuit of scale efficiencies, desire to enhance product portfolios, and the need to bolster digital capabilities. Industry players with a strong reputation and balance sheet and increased asset accumulation in fee-based businesses should be well-prepared to reengage in strategic buying, investing, or partnering opportunities.

Read the full review of 2020 across banking, IM/WM, and fintech—and see the future of banking M&A—by downloading the B&CM M&A outlook for 2021.

2021 banking and capital markets M&A outlook

What we expect to see for 2021

2021 banking and capital markets M&A drivers and trends

In addition to piloting their company through the pandemic and various economic and market conditions in 2021, banking executives should consider how to address the following trends and drivers. Download the full outlook to explore all the important insights.

Moving forward on 2021 banking M&A opportunities

Banking and capital markets organizations that have been deferring M&A moves may be willing to reengage in dealmaking as they look for new pathways to profitable growth in a reshaped, increasingly competitive financial services industry. Factors that had been driving M&A prior to and during the pandemic—the availability of significant dry powder, attractive valuations, a favorable low-interest-rate environment, and access to financing—will likely continue in 2021.

Uncertainty about the lingering effects of the pandemic likely will remain for the foreseeable future. But this shouldn’t deter B&CM leaders from capitalizing on 2021 M&A opportunities to build economies of scale, add innovative products and services, remove duplicate and unwieldy operations, expand digital proficiency, reduce costs, grow revenue, and increase shareholder value.

If you’d like to talk more about banking M&A activity and how your organization can succeed in 2021, let’s set up a conversation.

Look deeper

What are some other key trends, challenges, and opportunities that may affect your business and influence your strategy? Gain perspectives and insights from some of Deloitte’s other industry analyses.

Explore more industry outlooks.

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