Australia’s M&A trends 2026 in financial services

In recent years, the landscape of financial services dealmaking has evolved. CEOs are now more strategic in deploying capital and managing risk. The focus has shifted from divesting non-core businesses to a new phase of mergers and acquisitions (M&A). This shift is driven by a structural separation of product manufacturing and distribution, particularly in banking and insurance. Capital-light distribution models are attracting strategic buyers and tech-savvy newcomers, while capital-heavy manufacturing is increasingly supported by specialised capital pools, especially private credit. AI is reshaping competitive dynamics. Start-ups are honing in on profitable customer interactions, enhancing comparison and switching, while established players focus on assets where AI adds clear value or where business models resist commoditisation. In this context, private capital is actively backing platforms with strong growth prospects, steering clear of balance-sheet-heavy investments unless supported by structured or private credit solutions.

These trends are uneven across subsectors. In payments, consolidation is driven by the high cost of maintaining outdated infrastructure, regulatory pressures, and the need to fund major tech transitions like real-time processing and stablecoins. Core infrastructure is likely to consolidate, with value shifting to higher-margin services—a shift that private equity is well-positioned to finance. In private credit, the Australian market is maturing, paving the way for exits as paused processes resume and ownership shifts to tailored capital pools. Our 29th Global CEO Survey reveals that over half of Australian CEOs plan major acquisitions in the next three years, with many viewing M&A or partnerships as key to transformation. Boards and management teams are adapting to current conditions, moving forward with clear strategic intent—consolidating where scale is crucial, divesting non-fitting portfolios, and targeting assets that unlock future growth.

Banking

• Trends: Differentiation through customer experience and platform ecosystem. Focusing on and modernising the core, simplifying portfolios and return on capital, cloud systems, enhancing financial crime and cyber controls, improving SME economics.
• M&A and Partnerships: Carving out non-core units, process simplification, acquiring AI-led fraud, automation and credit decisioning capabilities, forming fintech partnerships for digital origination and servicing.
• Local Examples: Over the last couple of years, major banks have divested non-core businesses, and invested in growing the core to refocus capital on core banking. This has been supported by targeted portfolio sales, such as Westpac’s sale of the RAMS portfolio and Bank of Queensland’s sale of their Equipment Finance portfolio. Smaller banks continue to explore mergers (e.g. MyState Bank’s merger with Auswide Bank) to address cost pressures, including technology investment.

Insurance

• Trends: Consolidating brokers and MGAs, using analytics to reshape pricing and claims, transferring legacy risks, leading climate risk modelling. Life insurers are increasingly looking to acquire private credit capabilities.
• M&A and Partnerships: Broker and MGA roll-ups, acquiring catastrophe modelling and dynamic pricing capabilities, engaging in run-off and closed book transactions.
• Local Examples: Listed broker groups have expanded specialty lines and international reach, while regional consolidation has deepened distribution. Recent broker consolidation is expected to slow down with increased bid ask spreads as valuation multiples are coming down in a softening market. MGA valuation, in particular for agencies using domestic and international capacity, remain strong.

Wealth, Superannuation and Asset Management

• Trends: Consolidating platforms and advice licensees, innovating retirement income solutions, growing alternatives and private markets, forming super fund partnerships for origination and operations.
• M&A and Partnerships: Acquiring platform, tax, and reporting technology, adding ESG analytics and private markets operations.
• Local Examples: Consolidation and roll-ups across asset and wealth management, including the L1 Capital and Platinum Asset Management merger, and advice roll-ups, such as AZ NGA. ASX listed platforms have acquired administration and data software to lift adviser productivity, and large wealth transactions have reshaped product breadth.

Payments and Fintech

• Trends: Adopting real-time rails and PayTo, optimising merchant acquiring, rationalising and replatforming BNPL, expanding cross-border ecommerce.
• M&A and Partnerships: Acquiring gateway, issuer, and risk technology, forming embedded finance partnerships with retailers.
• Local Examples: Global acquirers have integrated Australian consumer fintechs to combine merchant ecosystems with data-driven engagement.

In today's dynamic financial landscape, understanding where to invest or collaborate is crucial. Here's a breakdown of key areas to consider across various subsectors:

• Banking: Focus on acquiring AI-driven solutions for fraud detection and anti-money laundering (AML). Enhance credit analytics and decision-making processes. Modernise with secure cloud solutions and core systems. Explore tools for SME origination and servicing, and invest in digital onboarding and personalisation to elevate customer experiences.
• Insurance: Streamline operations with claims triage and automation. Invest in catastrophe and climate risk modelling to stay ahead of environmental challenges. Implement dynamic pricing engines and improve broker workflows with advanced data platforms. Enhance customer interactions through self-service portals.
• Wealth, Super, and Asset Management: Optimise portfolio administration and tax reporting. Develop retirement income models and drawdown strategies. Integrate advice technology and compliance solutions. Ensure seamless data flow across registry, platform, and CRM systems. Strengthen private markets operations.
• Payments and Fintech: Focus on gateway and orchestration technologies. Enhance issuer processing and tokenisation capabilities. Integrate real-time payment systems and manage merchant risks effectively. Explore embedded finance and loyalty technologies to boost customer engagement.

A key insight from both the FS M&A Outlook and the CEO Survey is the shift in deal rationale. While scale and market share remain important, acquiring capabilities is the real differentiator. Banks, insurers, and asset managers are increasingly using M&A to accelerate technology and AI adoption, access data, digital platforms, and skilled talent, reposition portfolios towards capital-light, fee-based, or recurring revenue models, and build resilience against regulatory, funding, and margin pressures.

In my experience, the most valuable deals today are not the largest, but those aligned with a clear transformation agenda. Acquiring new capabilities—whether in payments, wealth, private markets, or digital distribution—can be more valuable long-term than merely adding balance sheet or customers.

Financial services M&A in 2026 will remain active, rewarding sophistication over speed. Scale and capital still matter, but increasingly, it's deal design, capability fit, and execution discipline that distinguish value creators from value diluters. For CEOs and boards, the challenge is to treat M&A not as an event, but as a strategic capability—one that can be flexed to build optionality, accelerate transformation, and position the organisation for a more convergent, technology-enabled future.

Australia’s Financial Services sector is entering a period where capability-led deals will be the decisive route to growth, resilience, and productivity. Building on this outlook, the path forward is clear. Focus on acquiring and partnering for the technologies, data, and operating disciplines that unlock transformation, while applying execution rigour that turns ambition into measurable value. The publication’s core thesis remains intact. Transformation is the priority, and scale matters selectively where economics and regulation favour consolidated platforms. Payments and private credit continue to offer attractive opportunities, with banks, insurers, wealth, and asset managers each facing distinctive catalysts for portfolio reshaping, technology modernisation, and customer-centric innovation. With the subsector deep dives, the capability acquisition map, and the regulator engagement packs now in place, dealmakers have a pragmatic playbook. It sets out what to buy or partner for, how to de-risk integration and regulatory approvals, and where value can be captured early through disciplined execution. The imperative is to move with confidence and pace, anchoring decisions in the needs of customers, the realities of regulation, and the power of data and digital to transform economics. The opportunity for leaders is to act now. Clarify capability gaps, prioritise the right subsector moves, and bring the organisation with you through well-governed integration. Those who do will shape the next phase of Australia’s Financial Services, delivering sustainable growth and stronger outcomes for customers, shareholders, and the broader economy.