M&A Report

M&A in Financial Services: Coming Back to Life

Four sectors, four ways to use M&A to grow.

By João Soares, Phil Anselmino, Markus Habbel, and Erin McCune

Published on 二月 04, 2025
min read


At a Glance Banks will acquire for scale leadership and to share technology investments. Insurers will use M&A to refocus on core lines of business. In payments, fraud prevention and identity verification will be among the hot areas for acquisitions. In wealth and asset management, deals will continue to grow private market offerings. This article is part of Bain's 2025 M&A Report. EXPLORE THE REPORT Technology, regulation, and shifting customer demands conspired to drive executives in the financial services arena back into the M&A market during 2024. Banks needed to get bigger—fast. Insurers divested their way out of troubled positions. Payments companies acquired for an edge in technology-driven scope deals. Wealth and asset managers sought deals that moved them into the territory of alternative asset managers, which were pursuing their own deals to build scale. While 2023 saw a slowdown in M&A activity across most sectors of the financial services industry, 2024 brought a return to dealmaking and promise for the future. But the number of insurance deals slowed as companies recovered from underwriting challenges. While banking and finance accounted for the lion’s share of the deals in 2024, it was cards and payments that represented the biggest growth, putting 11-month total deal value across financial services 72% higher than it was during the same 11-month period in 2023 (see Figure 1). Figure 1 Financial services deal value was up in 2024 Note: 2024 year-to-date includes deals announced from January through November 2024 Source: Dealogic as of December 13, 2024 Let’s look at the highlights for each sector. Banking: Deals to share costs and boost profits Banks are under pressure to keep costs under control as they grapple with the high cost of technology modernization as well as general inflation. In 2024, banks with an eye on profitability and a desire to defray technology investment costs turned to scale transactions to deliver meaningful cost synergies. The biggest was the announced more than $35 billion Capital One–Discover deal in the US, a move that spanned both the banking and payments sectors and that promised at least $2.7 billion in synergies. In Europe, scale motivated BBVA’s pursuit of Sabadell (with €850 million in synergies) and UniCredit’s regional leadership plays, such as boosting its stake in Commerzbank and making a binding offer for Banco BPM, to name a few. North America saw consolidation among smaller regional players, including a tie-up between SouthState and Independent Bank Group. In total, banking M&A rebounded, with 215 deals greater than $30 million in value announced by December 2024 compared with 151 deals announced during the same period in 2023. We expect to see more scale M&A as banks aim for leadership economics and make further investments in technology. Bank executives are openly signaling interest in M&A: The number of banks open to acquiring or actively pursuing acquisitions jumped almost threefold among the top 50 US banks in 2024 vs. 2023 and fourfold among Europe’s top 25 banks (see Figure 2). Figure 2 On average, global banks were more than twice as likely to be actively pursuing or open to pursuing M&A in 2024 vs. 2023 Notes: Includes only publicly traded banks and banks in which transcripts are readily available; assesses future interest in M&A and excludes integration of already closed deals Sources: Federal Reserve; S&P 500 Financials; Bain analysis In the US, a more ambitious M&A agenda may be easier to pursue under the new federal administration, which is expected to be more open to banking sector M&A and to relax US banking regulations. The potential for a more relaxed US regulatory environment will put more urgency on European banks to strengthen their competitive positions and improve efficiency and profitability via consolidation. The message for banks: There’s an urgency to act. Be proactive in identifying potential acquirees that will deliver leadership economics, and be prepared to articulate ambitious cost synergy targets to be competitive in a consolidating market. Insurance: Deals to sharpen a business focus Insurance dealmaking in 2024 has been characterized by divestitures and some scale consolidation plays. Deal value rose slightly, at $77 billion by December 2024 compared with $50 billion in December 2023, even as deal volume declined to only 72 deals during the period compared with 95 for 2023. Portfolio reshaping, a characteristic of 2024, will continue into 2025, with carriers working their way out of troubled underwriting positions, balance sheet impairments, and ratings downgrades (see Figure 3). We expect continued pruning of subscale lines and geographic portfolio reshaping in multinationals. Noncore lines will be jettisoned to better owners, following the example of Allstate and its exit of the employer voluntary benefits business. Geographic footprints will be assessed for the appropriate use of capital along with growth and profit potential. Allianz’s divestiture of its US MidCorp and Entertainment businesses will not be the last of the geographic portfolio reshaping for the multinationals. Figure 3 In 2024, insurers slowed on overall deal activity, using divestitures to strategically reshape their portfolios Note: Net deal activity is calculated by subtracting the total divestiture value from the total acquisition value Source: Dealogic as of November 5, 2024 As the industry puts the challenges of 2023 and early 2024 behind it, the stage will be set for more transformative growth-oriented activity, as characterized by two market-defining transactions during the last month of 2024—namely, Gallagher acquiring AssuredPartners and Aviva buying Direct Line. And the industry saw a new wrinkle in brokerage consolidation in 2024, with the big strategics acquiring large private equity–backed platforms. Aon, Marsh, and Gallagher all picked up scale assets, and we expect more to come in 2025. Strategics provide a viable path for private equity funds looking for exits, especially for the platforms that are “too big to buy” for the fund-to-fund trade and that are not ready for an IPO exit. If a more favorable regulatory environment emerges, especially in the US, we will see a continued reshuffling of the brokerage leaderboards across markets. What should carriers and brokers be doing to make M&A a core part of the growth strategy? We say follow the “three P’s”: Be proactive in assessing targets and in trimming portfolios. Be prepared to move fast in diligence, as the best deals will be heavily contested. Be preemptive in pursuing opportunities, as the best deals are those not yet for sale. Payments: Deals to ride the payments digitization wave The year 2023 was a dry spell for M&A in the payments sector, with funding shrinking, young fintechs withering, and rising interest rates freezing strategic deals and private equity activity. That changed in 2024. Now, payment incumbents across all regions are using M&A to meet a variety of ends as they ride the wave of payments digitization (see Figure 4). And these deal objectives will drive even more M&A in 2025. Figure 4 Payments companies are using strategic M&A to accelerate innovation and global growth Source: Bain analysis Some will double down, as was the case with Shift4’s purchase of Revel Systems in 2024. Some will expand capabilities and in other ways build out the payments infrastructure. That’s what Mastercard did with its acquisition of Minna Technologies—the deal helps Mastercard improve the subscription experience for consumers. Other deals will help a company expand geographically. UK-based Banked purchased Waave to expand into Australia. Still, other deals will augment transaction revenue with value-add services, such as those that provide working capital for small and midsize businesses. For example, payments software provider Flywire bought Invoiced, a business-to-business finance firm. There will be divestitures, too. StoneCo is selling its Linx software business, having failed to achieve synergies; Barclays Bank is in talks over selling its merchant acquiring business; and four years after purchasing Worldpay Merchant Solutions, FIS sold its majority stake. These moves highlight the need to carefully diligence assets, rigorously pressure test investment theses, and to be extremely intentional about post-acquisition integration. Indeed, deals are changing the payments chessboard. In the US, payments M&A in 2024 was dominated by a couple of large and influential deals—most notably, the Capital One–Discover deal, which has the potential to realign competitive dynamics in the US, and the Stripe purchase of Bridge, which puts stablecoin back on the map. Meanwhile, fraud prevention and identity verification are particularly hot areas for activity, as highlighted by acquisitions by Mastercard, Visa, and Socure. Evolving fraud risks—particularly as authorized push payment scams intensify and generative AI fuels deepfakes—ensure that fraud prevention and identity verification will be a long-term investment vector. We anticipate growing momentum into 2025 as valuation expectations align, interest rates moderate, investors impatiently seek exits, and competition to monetize value-add services intensifies. The number and value of M&A transactions is unlikely to top the 2021 peak. But the winter has indeed passed. Wealth and asset management: Deals to grow private market offerings The success of asset managers with a private market focus is quickly redefining the playing field in wealth and asset management—and sparking a revival in M&A and joint ventures. As a group, alternative asset managers that invest in the capital of privately owned companies instead of publicly traded companies have watched their market cap grow by more than 4 times over the past five years compared with a 1.6 times market cap growth for the other players in the sector—namely, traditional asset managers with a public market focus or wealth management arms of universal banks (see Figure 5). In addition to private companies, alternative asset managers also invest in a broader range of sub-asset classes, which can vary from venture capital funds and hedge funds to real estate. Figure 5 In recent years, private market asset managers have been driving deal activity, and their market cap has grown more than 4 times Notes: Includes publicly announced deals only; traditional investment managers include banks, insurers, sovereign wealth funds, and family offices; alternative asset managers include private equity, hedge funds, venture capital, real estate asset managers, and other alternative asset managers; market capitalization growth rates data through December 13, 2024 Source: Bain Strategic M&A in Alternatives database The big private market shift has resulted in a double-barreled boost in M&A. For one thing, public market asset managers and universal banks are aggressively acquiring or partnering to move into private markets. In December, BlackRock announced that it will buy HPS Investment Partners for $12 billion to expand its offerings in the private credit market. The move, which is one of three such deals BlackRock made in 2024, allows the traditional asset manager to provide new private credit products to its large client base. At the same time, asset managers already in private markets are just as ambitiously doing deals to gain scale. Alternative asset manager Apollo formed a $25 billion exclusive partnership with Citigroup to combine Citi's extensive client network and banking capabilities with Apollo's deep capital resources and expertise in private credit investments. By December, deal value in wealth and asset management had more than doubled compared with the first 11 months of 2023. And we believe that the momentum will continue—and possibly accelerate—in 2025, especially as wealth and asset managers not currently in private markets find themselves forced to acquire or partner to survive. The most successful traditional asset managers and wealth managers will look for deals that provide them with products that generate alpha for clients while alternative asset managers will primarily aim to build scale. As the market converges and becomes even more competitive, companies that pursue neither route will find themselves a target for competitors that do. Read the Next Chapter M&A in Healthcare and Life Sciences: Why Companies That Adapt to the New Realities Will Come Out Ahead Read our 2025 M&A Report Download the PDF EXPLORE THE REPORT Overview Looking Ahead to 2025: Preparing for What Comes Next Looking Back at M&A in 2024: Dealmakers Adapt as the Market Idles Generative AI in M&A: You’re Not Behind—Yet Where the Deals Are: 2024’s Top M&A Markets Ten Takeaways from Our M&A Executive Survey Industry Views Aerospace & Defense M&A Automotive & Mobility M&A Building Products & Technology M&A Consumer Products M&A Energy & Natural Resources M&A Financial Services M&A Healthcare & Life Sciences M&A Machinery & Equipment M&A Media & Entertainment M&A Retail M&A Technology M&A Telecommunications M&A

At a Glance

Banks will acquire for scale leadership and to share technology investments.
Insurers will use M&A to refocus on core lines of business.
In payments, fraud prevention and identity verification will be among the hot areas for acquisitions.
In wealth and asset management, deals will continue to grow private market offerings.

Technology, regulation, and shifting customer demands conspired to drive executives in the financial services arena back into the M&A market during 2024. Banks needed to get bigger—fast. Insurers divested their way out of troubled positions. Payments companies acquired for an edge in technology-driven scope deals. Wealth and asset managers sought deals that moved them into the territory of alternative asset managers, which were pursuing their own deals to build scale.

While 2023 saw a slowdown in M&A activity across most sectors of the financial services industry, 2024 brought a return to dealmaking and promise for the future. But the number of insurance deals slowed as companies recovered from underwriting challenges. While banking and finance accounted for the lion’s share of the deals in 2024, it was cards and payments that represented the biggest growth, putting 11-month total deal value across financial services 72% higher than it was during the same 11-month period in 2023 (see Figure 1).

Financial services deal value was up in 2024

Let’s look at the highlights for each sector.

Banking: Deals to share costs and boost profits

Banks are under pressure to keep costs under control as they grapple with the high cost of technology modernization as well as general inflation. In 2024, banks with an eye on profitability and a desire to defray technology investment costs turned to scale transactions to deliver meaningful cost synergies. The biggest was the announced more than $35 billion Capital One–Discover deal in the US, a move that spanned both the banking and payments sectors and that promised at least $2.7 billion in synergies. In Europe, scale motivated BBVA’s pursuit of Sabadell (with €850 million in synergies) and UniCredit’s regional leadership plays, such as boosting its stake in Commerzbank and making a binding offer for Banco BPM, to name a few. North America saw consolidation among smaller regional players, including a tie-up between SouthState and Independent Bank Group. In total, banking M&A rebounded, with 215 deals greater than $30 million in value announced by December 2024 compared with 151 deals announced during the same period in 2023.

We expect to see more scale M&A as banks aim for leadership economics and make further investments in technology. Bank executives are openly signaling interest in M&A: The number of banks open to acquiring or actively pursuing acquisitions jumped almost threefold among the top 50 US banks in 2024 vs. 2023 and fourfold among Europe’s top 25 banks (see Figure 2).

On average, global banks were more than twice as likely to be actively pursuing or open to pursuing M&A in 2024 vs. 2023

In the US, a more ambitious M&A agenda may be easier to pursue under the new federal administration, which is expected to be more open to banking sector M&A and to relax US banking regulations. The potential for a more relaxed US regulatory environment will put more urgency on European banks to strengthen their competitive positions and improve efficiency and profitability via consolidation. The message for banks: There’s an urgency to act. Be proactive in identifying potential acquirees that will deliver leadership economics, and be prepared to articulate ambitious cost synergy targets to be competitive in a consolidating market.

Insurance: Deals to sharpen a business focus

Insurance dealmaking in 2024 has been characterized by divestitures and some scale consolidation plays. Deal value rose slightly, at $77 billion by December 2024 compared with $50 billion in December 2023, even as deal volume declined to only 72 deals during the period compared with 95 for 2023.

Portfolio reshaping, a characteristic of 2024, will continue into 2025, with carriers working their way out of troubled underwriting positions, balance sheet impairments, and ratings downgrades (see Figure 3). We expect continued pruning of subscale lines and geographic portfolio reshaping in multinationals. Noncore lines will be jettisoned to better owners, following the example of Allstate and its exit of the employer voluntary benefits business. Geographic footprints will be assessed for the appropriate use of capital along with growth and profit potential. Allianz’s divestiture of its US MidCorp and Entertainment businesses will not be the last of the geographic portfolio reshaping for the multinationals.

In 2024, insurers slowed on overall deal activity, using divestitures to strategically reshape their portfolios

As the industry puts the challenges of 2023 and early 2024 behind it, the stage will be set for more transformative growth-oriented activity, as characterized by two market-defining transactions during the last month of 2024—namely, Gallagher acquiring AssuredPartners and Aviva buying Direct Line.

And the industry saw a new wrinkle in brokerage consolidation in 2024, with the big strategics acquiring large private equity–backed platforms. Aon, Marsh, and Gallagher all picked up scale assets, and we expect more to come in 2025. Strategics provide a viable path for private equity funds looking for exits, especially for the platforms that are “too big to buy” for the fund-to-fund trade and that are not ready for an IPO exit. If a more favorable regulatory environment emerges, especially in the US, we will see a continued reshuffling of the brokerage leaderboards across markets.

What should carriers and brokers be doing to make M&A a core part of the growth strategy? We say follow the “three P’s”:

Be proactive in assessing targets and in trimming portfolios.
Be prepared to move fast in diligence, as the best deals will be heavily contested.
Be preemptive in pursuing opportunities, as the best deals are those not yet for sale.

Payments: Deals to ride the payments digitization wave

The year 2023 was a dry spell for M&A in the payments sector, with funding shrinking, young fintechs withering, and rising interest rates freezing strategic deals and private equity activity. That changed in 2024.

Now, payment incumbents across all regions are using M&A to meet a variety of ends as they ride the wave of payments digitization (see Figure 4). And these deal objectives will drive even more M&A in 2025.

Payments companies are using strategic M&A to accelerate innovation and global growth

Source: Bain analysis

Some will double down, as was the case with Shift4’s purchase of Revel Systems in 2024. Some will expand capabilities and in other ways build out the payments infrastructure. That’s what Mastercard did with its acquisition of Minna Technologies—the deal helps Mastercard improve the subscription experience for consumers. Other deals will help a company expand geographically. UK-based Banked purchased Waave to expand into Australia. Still, other deals will augment transaction revenue with value-add services, such as those that provide working capital for small and midsize businesses. For example, payments software provider Flywire bought Invoiced, a business-to-business finance firm.

There will be divestitures, too. StoneCo is selling its Linx software business, having failed to achieve synergies; Barclays Bank is in talks over selling its merchant acquiring business; and four years after purchasing Worldpay Merchant Solutions, FIS sold its majority stake. These moves highlight the need to carefully diligence assets, rigorously pressure test investment theses, and to be extremely intentional about post-acquisition integration.

Indeed, deals are changing the payments chessboard. In the US, payments M&A in 2024 was dominated by a couple of large and influential deals—most notably, the Capital One–Discover deal, which has the potential to realign competitive dynamics in the US, and the Stripe purchase of Bridge, which puts stablecoin back on the map. Meanwhile, fraud prevention and identity verification are particularly hot areas for activity, as highlighted by acquisitions by Mastercard, Visa, and Socure. Evolving fraud risks—particularly as authorized push payment scams intensify and generative AI fuels deepfakes—ensure that fraud prevention and identity verification will be a long-term investment vector.

We anticipate growing momentum into 2025 as valuation expectations align, interest rates moderate, investors impatiently seek exits, and competition to monetize value-add services intensifies. The number and value of M&A transactions is unlikely to top the 2021 peak. But the winter has indeed passed.

Wealth and asset management: Deals to grow private market offerings

The success of asset managers with a private market focus is quickly redefining the playing field in wealth and asset management—and sparking a revival in M&A and joint ventures.

As a group, alternative asset managers that invest in the capital of privately owned companies instead of publicly traded companies have watched their market cap grow by more than 4 times over the past five years compared with a 1.6 times market cap growth for the other players in the sector—namely, traditional asset managers with a public market focus or wealth management arms of universal banks (see Figure 5). In addition to private companies, alternative asset managers also invest in a broader range of sub-asset classes, which can vary from venture capital funds and hedge funds to real estate.

In recent years, private market asset managers have been driving deal activity, and their market cap has grown more than 4 times

The big private market shift has resulted in a double-barreled boost in M&A. For one thing, public market asset managers and universal banks are aggressively acquiring or partnering to move into private markets. In December, BlackRock announced that it will buy HPS Investment Partners for $12 billion to expand its offerings in the private credit market. The move, which is one of three such deals BlackRock made in 2024, allows the traditional asset manager to provide new private credit products to its large client base. At the same time, asset managers already in private markets are just as ambitiously doing deals to gain scale. Alternative asset manager Apollo formed a $25 billion exclusive partnership with Citigroup to combine Citi's extensive client network and banking capabilities with Apollo's deep capital resources and expertise in private credit investments.

By December, deal value in wealth and asset management had more than doubled compared with the first 11 months of 2023. And we believe that the momentum will continue—and possibly accelerate—in 2025, especially as wealth and asset managers not currently in private markets find themselves forced to acquire or partner to survive. The most successful traditional asset managers and wealth managers will look for deals that provide them with products that generate alpha for clients while alternative asset managers will primarily aim to build scale. As the market converges and becomes even more competitive, companies that pursue neither route will find themselves a target for competitors that do.

Read the Next Chapter

M&A in Healthcare and Life Sciences: Why Companies That Adapt to the New Realities Will Come Out Ahead