The Role of Banking Relationships in Fintech Acquisitions: The Hidden Value Driver

Introduction

In the world of fintech acquisitions, there is one asset that experienced buyers value above almost everything else: banking relationships. You can have the most prestigious license in the most favorable jurisdiction, but without a bank willing to hold your funds, process your transactions, and support your operations, that license is effectively unusable.

This article explores why banking relationships have become the hidden kingmaker in fintech acquisitions, how they affect deal pricing, and what buyers and sellers should know about preserving and transferring these critical partnerships.

Why Banks Are Reluctant to Serve Fintechs

To understand why banking relationships are so valuable in fintech acquisitions, you first need to understand why they are so hard to establish. Banks face several concerns when onboarding fintech clients:

• Regulatory risk: Banks are subject to their own regulatory requirements and can face penalties if their fintech clients engage in non-compliant activities. This creates a cautious, risk-averse approach to fintech onboarding.
• AML/KYC concerns: Fintech companies, particularly those in payments and crypto, handle high volumes of transactions that can be difficult to monitor. Banks worry about being exposed to money laundering or terrorist financing risk through their fintech clients.
• De-risking pressure: Regulators in many jurisdictions have been pressuring banks to reduce their exposure to higher-risk sectors, which often includes money services businesses and virtual asset service providers.
• Compliance costs: Onboarding and monitoring a fintech client requires significant compliance resources. For smaller banks, the cost of due diligence on a fintech client may exceed the revenue the relationship generates.
• Correspondent banking pressure: Banks that serve fintech companies may face scrutiny from their own correspondent banking partners, creating cascading risk that discourages them from taking on fintech clients.

The result is a market where many fintech companies spend months — sometimes over a year — trying to find a banking partner, often being rejected multiple times before finding a willing institution.

How Banking Relationships Affect Acquisition Pricing

The presence or absence of banking relationships can dramatically affect the price of a pre-licensed fintech entity. Here is how:

Premium for Established Banking

A licensed entity with active banking relationships at reputable institutions can command a premium of 30 to 100 percent over a comparable entity without banking. This premium reflects the time and effort the buyer would otherwise spend securing banking access, as well as the risk that they might not succeed at all.

Discount for No Banking

Conversely, a licensed entity that has lost its banking relationships or never established them will be discounted. Buyers recognize that they will need to invest significant time and resources in finding a banking partner, with no guarantee of success.

Tier Matters

Not all banking relationships are equal. A relationship with a tier-one international bank (like a major European or US institution) is worth significantly more than an account at a small regional bank or an EMI acting as a banking substitute. The tier of the banking partner signals the quality and sustainability of the relationship.

Preserving Banking Relationships During an Acquisition

One of the biggest risks in a fintech acquisition is losing the banking relationship during the ownership transition. Banks often have clauses in their agreements that allow them to terminate the relationship upon a change of control. Here is how to manage this risk:

1. Engage the bank early: Inform the banking partner about the planned ownership change as early as possible in the process. Surprises create distrust, which can trigger a termination.
2. Present the new owners: Banks will want to conduct due diligence on the new shareholders and management. Prepare a comprehensive presentation covering the new owners' backgrounds, business plan, and compliance capabilities.
3. Maintain continuity: If possible, retain the existing compliance officer and key operational staff through the transition period. Banks are more comfortable when they see continuity in the people they already know and trust.
4. Demonstrate enhanced compliance: Use the transition as an opportunity to show the bank that compliance standards will be maintained or improved under new ownership.
5. Have a backup plan: Despite your best efforts, the bank may decide to exit the relationship. Identify alternative banking options before closing the acquisition so you are not left without a financial partner.

Types of Banking Relationships in Fintech

Safeguarding Accounts

EMIs and payment institutions are required to safeguard customer funds in segregated accounts at credit institutions. These safeguarding accounts are the most critical banking relationship for any licensed payments company.

Operational Accounts

Beyond safeguarding, fintech companies need operational bank accounts for receiving revenue, paying expenses, and managing corporate treasury. These are typically easier to maintain than safeguarding accounts.

Correspondent Banking

For companies involved in cross-border payments, access to correspondent banking networks (particularly SWIFT and SEPA) is essential. Correspondent banking relationships enable international fund transfers and are among the most difficult banking relationships to establish.

Card Issuing Partnerships

If the fintech entity issues payment cards, it will have relationships with card network sponsors or BIN sponsors. These partnerships enable the company to issue Visa or Mastercard-branded cards and are highly valuable for card-based business models.

What Buyers Should Ask About Banking

During due diligence, ask these critical questions about the target entity's banking relationships:

• Which banks does the entity work with, and what is the status of each relationship?
• Are there any change-of-control clauses in the banking agreements?
• Has the entity ever had a banking relationship terminated? If so, why?
• What volume of transactions does the entity process through each banking partner?
• Are the safeguarding accounts compliant with regulatory requirements?
• Does the entity have access to SWIFT, SEPA, or other payment networks through its banking partners?
• Has the bank been informed about the planned acquisition, and what is their preliminary response?

The Future: Banking Access Is Getting Harder, Not Easier

Several trends suggest that banking access for fintech companies will become even more challenging in the coming years:

• Increased regulatory scrutiny on bank-fintech relationships, particularly in the wake of several high-profile fintech failures.
• Consolidation in the banking sector, reducing the number of banks willing to serve fintech clients.
• Rising compliance costs making smaller fintech accounts unprofitable for banks.
• Growing de-risking pressure from correspondent banks and regulators.

These trends mean that the banking relationship premium in fintech acquisitions is likely to increase over time, making entities with strong banking partnerships even more valuable.

Conclusion

Banking relationships are the hidden infrastructure that makes a fintech license operational. Without banking access, even the most prestigious license is just a piece of paper. For buyers, evaluating and preserving banking relationships should be at the top of the due diligence checklist. For sellers, maintaining strong banking partnerships is the single most effective way to maximize the value of your licensed entity. On Dealable24, listings that include established banking relationships consistently attract more interest and higher offers — a clear signal that the market understands the critical importance of this often-overlooked asset.