Financial technology dealmaking continues to surge, recently led by payments M&A. But firms’ organic talent growth and pursuit of partnerships could increasingly provide alternatives to mergers even as the current level of activity continues apace. “In the banking market, [companies] have a lot more tools at their disposal,” EY Americas Fintech and Payments M&A Leader Sara Elinson says. “Go back five years ago, and to enter digital markets, you had to acquire.”

But now, many banks have already built out platforms of their own organically, like Goldman Sachs‘ rollout of its consumer bank Marcus. Or they’ve turned to smaller acquisitions to build talent that can address future markets. JP Morgan Chase’s purchase of a 75 percent stake in Volkswagen’s payments unit earlier this month and its 2019 healthcare payments deal for InstaMed come to mind.

“Banks now have the talent internally to build a new thing and to attract the next generation of tech talent into a bank,” Elinson explains. “The ability to build organically, and supplement with strategic partnerships, and do M&A? Having three tools available to compete with fintechs is interesting.”

The resulting environment could mean less need for strategics to shell out increasingly eye-watering multiples to enter or deepen exposure to new markets. At least in the future. Even Goldman’s organic growth pipeline is balanced alongside dealmaking: it’s $2.2 billion acquisition of home improvement lender GreenSky earlier this month, a recent case in point.

Brandon Zero