Global Sector Outlook

2022 proved to be a stellar year for M&A in the global fintech sector. After a nearly record-breaking 2021, deal activity and valuations remained high throughout the year despite record high inflation, geopolitical challenges, and increasing concerns of a recession. As economic and geopolitical challenges somewhat subside in 2023, we expect M&A deal activity to remain high, with investors mainly focusing on the formation of strategic partnerships and industry consolidation plays.

Key themes expected to drive higher deal volumes in 2023 include: a stronger focus on dealmaking in underdeveloped regions, ongoing strength in the payments sector, the rise of fintech super apps, and regional consolidations.

M&A activity on the African continent

Africa’s thriving fintech industry has provided investors with countless opportunities over the past decade, showing no signs of abating anytime soon.

Africa is currently undergoing a ‘fintech eruption’, which is intensified by the use of cash in approximately 90 percent of transactions on the continent. Fintech revenues, particularly in the payments space, therefore, have considerable growth potential, and many local and international investors are taking notice.

While the opportunity for fintech growth across the African continent is significant, in certain regions, the total addressable market is limited by various constraints, most notably a lack of infrastructure. Fintech’s looking to scale across the continent may need to take this geographic variability into account and tailor their approach to each country based on its inherent characteristics, infrastructure, and varying customer needs. We therefore expect cross-border M&A deals to remain prevalent in 2023 as larger fintechs look to acquire proven business models across different geographic markets.

The ‘fintech eruption’, while posing a threat to traditional market participants, will not render them obsolete. Traditional players are expected to play an increasing role in M&A activity within the industry as they aim to meet consumer demand and protect market share. Consolidation M&A transactions are expected to become more prevalent in 2023 as financial institutions turn toward fintech acquisitions to digitise their service offerings to remain competitive.

M&A activity in South Africa

South Africa, having the largest and most developed financial services sector in Africa, unsurprisingly has the largest fintech sector as well, accounting for approximately 40% of the continent’s fintech revenues. The country’s mature financial services sector gives market participants access to improved digital infrastructure, allowing more complex fintechs to develop and thrive, where they otherwise would not have been able to. As a result, innovative and advanced financial services such as B2B liquidity, open banking, and regulatory technology are more commonplace in the South African landscape compared to the rest of Africa (excluding Nigeria). Given the aforementioned factors, we expect South African cross-border transactions to remain attractive as international investors seek to acquire advanced fintech businesses who provide entry into the African market.

As with the rest of Africa, South Africa’s fintech sector is dominated by the Payments subsector, accounting for over 50% of the industry’s revenues, and 60% of completed M&A transactions in 2022. Regardless of the payments sector’s size and maturity, it continues to present investors with many opportunities. In South Africa, over 95% of SMEs are classified as micro enterprises operating in the informal sector. Traditional banks are limited in their ability to serve these merchants leaving a large gap in the market. Fintech solutions capable of serving this previously ‘ignored’ group, are therefore expected to attract investors’ attention.

M&A trends in South African fintech


-Blockchain-solutions are increasingly being utilised to simplify and lower the cost of transactions.

-There is a growing emphasis on consolidations within the space as both fintech and traditional financial institutions look to diversify their offerings and enter new markets.

-‘Buy now, pay later’ transactions were prominent in 2022 and are likely to play a significant role in the payments category in 2023.

-An increased demand for contactless/cardless payments is expected to drive development and transactions in this space.

Insurance technology

-An increased demand from consumers for novel and contactless insurance is expected to drive acquisitions of unique insurance solutions.

-Insurance Technology companies are expected to consolidate their position in existing markets and utilize acquisitions for geographical expansion.

-Traditional insurers are expected to continue partnering with their tech-enabled competitors to access new digital and client-centric capabilities.

Regulatory technology

-Expanding cyberthreats and data security concerns have introduced new areas of risk and opportunity.

-Identity management and control solutions are expected to influence M&A transactions given the increased focus on fraud detection and prevention.

Wealth technology

-Strategic buyers are pursuing both scale and scope deals to expand their businesses and acquire new Wealth Technology capabilities.

-Private Equity and Venture Capital have both ventured into the Wealth Tech space as tech-enabled companies provide profitable asset and wealth management services to previously ‘unprofitable’ segments of the population.


-Traditional financial services firms are likely to adopt blockchain technologies as they attempt to improve transaction processing and settlement speeds.

-Maturing crypto firms looking to scale are expected to do so through mergers and acquisitions as the current crypto bear market keeps valuations low.

Open banking

-Open banking firms are expected to partner with an increasing number of wealth and insurance tech companies as the demand for API access to banking information rises.

-Cyber/data security companies are expected to become acquisition targets as open banking firms look to enhance their data protection capabilities.

South African Fintech M&A is expected to continue at elevated levels during 2023. While the bulk of the year’s activity will focus on the payments space, areas such as open banking, regulatory technology, and wealth technology, are starting to show promise.

M&A activity during 2023 is expected to build on last year’s momentum, strengthened by an increasing global demand for fintech businesses.

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