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Over half of private equity firms believe technology innovation offers biggest potential value in financial services

22 January 2019

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  • Over half (53%) of respondents to the survey believe financial services creates the most potential for value creation through technological innovation, ahead of healthcare (18%), consumer (8%), energy (8%), industrials (8%) and TMT (5%)
  • More than half (51%) identified the biggest technology risk when assessing target companies as cybersecurity or data breaches

Intertrust, a global leader in providing expert administrative services to clients operating and investing in the international business environment, interviewed private equity professionals across Europe, North America, the Middle East and Asia to identify the value-add delivered by new technologies now and in the future.

Over half (53%) of respondents to the survey believe financial services creates the most potential for value creation through technological innovation, ahead of healthcare (18%), consumer (8%), energy (8%), industrials (8%) and TMT (5%). This is driven by the proliferation of new fintech companies that offer disruptive services such as P2P lending and aggregated financial management.

However, more than half (51%) identified the biggest technology risk when assessing target companies as cybersecurity or data breaches, followed by systems being unable to cope with the impact of regulatory change (12%) and business models becoming obsolete due to disruptive technology (12%).

Michael Johnson, Director of Fund Services, Intertrust says:

“The financial services sector is clearly the one to watch. However, there are signs that new ventures offering primary healthcare services through disruptive technology may well catch up with fintechs in the coming years and could offer some interesting buying opportunities.”

“The fact that cybersecurity has been identified as the biggest risk when assessing target companies is not surprising given the impact on reputation and potential consequences such incidents can have. However, the impact of systems being unable to cope with regulatory change should not be overlooked as a real threat and firms need to ensure they are using the correct tools to prepare for emerging regulatory pressures”.