It’s a good time to examine the broader forces behind mergers and acquisitions and consolidation in financial markets in the wake of the recent announcement of US asset manager Nuveen’s US$13.48 billion acquisition of the UK’s Schroders These forces are likely to change the structure of the asset management industry.
At least 2,000 financial institutions merged in 2025, according to recent analysis released by WTW.
Margin pressure for banks working in the low interest rate environment is one key driver. Merging allows economies of scale at combined entities, and increase market share in a relatively low-yielding environment.
Digital transformation and artificial intelligence are also important drivers. According to WTW’s analysis, banks and insurers are bringing technological developments in-house by acquiring blockchain firms and financial technology startups of various kinds.
Banks also face the need to fend off new open banking platforms and other disruptive technologies, some of which support traditional capabilities like asset custody and settlement.
With technology also driving speed of transactions, bringing tech-enabled versions of these functions in-house will in principle create more efficient-competitive managers. “Customer demand for seamless, tech-driven services further propels this,” WTW says.
Upscaling asset managers and banks are also likely to integrate in a way that blurs the lines between them. Goldman Sachs is one classic template for housing banking and asset management under one roof. More and more combined organisations will likely follow this model.
According to WTW, the M&A impetus in financial markets is likely to endure at least through 2026. Private investment firms with dry powder to burn may help fuel the process, as may the growing need for asset management and banking institutions to bring in capabilities to manage private assets.
But the process is not without its risks. WTW highlights several, especially the usual risks of post-deal execution and realisation of synergies. After a period of highly priced deals, with US valuations in particular still very high, there is significant risk of overpayment for targets.
Other potentially significant risks include culture clashes and mismatches within merged entities. The risks will be higher if they include both banking and asset management groups.
Still, the path of growth and development for the financial industry seems to be set. More transformative and integrating deals are likely to be on the table in the year ahead.
