The News Bee

The next big acquisition craze

The next big acquisition craze

The next big acquisition craze could result in more khakis-wearing tech geeks on Wall Street. Technologies that compete with traditional banking businesses, like bitcoin and computer-generated investment advice, have Wall Street worried they will soon face the same disruption issues that have plagued retail, travel and publishing industries. The emerging financial tech industry, dubbed fintech, now threatens to grab $4.7 trillion in revenue and $470 billion in profits from traditional Wall Street firms, Goldman Sachs recently predicted.635673900981646004-AP-Financial-Markets-Wall-Street

The good news for Silicon Valley is that deep-pocketed Wall Street firms will seek to stave off the competition by throwing money at the space through investments and acquisitions, experts said. Aberdeen Asset Management, which manages $500 billion in assets, recently tasked its board’s innovation committee to study the problem and to scout for financial technologies to buy, said co-founder and CEO Martin Gilbert.

“My point is, let’s not be complacent about this,” Gilbert said. “Let’s not assume that Google is not going to enter asset management because it’s a regulated industry.” Aberdeen is not alone. In January, the New York Stock Exchange announced a strategic investment in Coinbase, a bitcoin wallet provider. And last month, JP Morgan CEO Jamie Dimon warned that “Silicon Valley is coming” in a letter to shareholders.

“There are hundreds of start-ups with a lot of brains and money working on various alternatives to traditional banking,” Dimon wrote in the letter, which sought to reassure investors that the behemoth bank is prepared to deal with the problem. Anand Sanwal, CEO of CB Insights, which researches private companies for interested investors, predicts Wall Street investments and acquisitions in financial technology start-ups will take off in the next “18 months and beyond.”