US banks are future-proofing their businesses by investing in fintech.
The most active US bank investors in fintech (based on number of deals backed) are Goldman Sachs, Citigroup, and JP Morgan Chase & Co. While all 3 have ramped up their fintech investment activity in recent years, they’ve taken different strategic approaches.
Below, we visualize how these US banking leaders have built their fintech portfolios over the past decade.
Please click to enlarge.
Goldman Sachs and Citigroup are among the most active investors largely due to their investment arms — GS Growth and Citi Ventures — which participated in 59 and 38 fintech deals from Q1’18 through Q2’20, respectively. As a result, the two banks continue to invest in a wide range of fintech sectors.
Goldman Sachs has focused its M&A strategy in recent years on wealth management. In May 2019, the bank spent $750M to acquire wealth management firm United Capital. More recently, it snapped up boutique wealth management custodian and technology provider Folio Investing in May 2020.
The bank has also set its sights on alternative lending and capital markets. Betting on these sub-industries aligns with Goldman’s digital strategy of scaling its consumer offering, Marcus, and enhancing its digital wealth capabilities.
Citi has also had a capital markets focus, backing 10 deals in this area since 2018. The bank has also made 5 real estate investments, 5 small business-focused investments, and 5 investments to wealth & asset management startups over the same period.
Generally, these investments fit into Citi’s efforts to enhance its Institutional Clients Group business, specifically the Investment Banking and Markets & Securities Services functions, which drove much of the bank’s revenue growth through the first half of 2020.
JP Morgan, meanwhile, remains focused on supporting its capital markets and small business offerings. The bank backed 10 deals in capital markets and 5 in small- and medium-sized business (SMB) solutions from Q1’18 through Q2’20. Over the same time period, JP Morgan also made 4 investments in wealth & asset management and 3 in payments.
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