KPMG acquires Australian FinTech company Markets IT

24 February 2016 Consultancy.uk

Accounting and consulting giant KPMG has acquired Markets IT for an undisclosed sum. The purchase of the Australian FinTech player will improve KPMG’s expertise in the area of Murex software, as the firm seeks to provide financial institutions with a range of solutions in the area of regulatory compliance, cost-cutting and meeting competitive pressures. Markets IT’s roughly 25 employees will transfer to KPMG and be integrated into the firm’s Capital Markets Technology practice.

Following the financial crisis, resulting from the collapse of the sub-prime mortgage market, banks – deemed too big to fail – were provided state lifelines. The crises brought the world to its knees, with lingering effects still present within the system. In the years that followed the banking sector found itself under increasing scrutiny, not merely for its involvement in the sale of a range of dodgy products to people that could not afford them or international fraud in the form of the Libor scandal, among others, but also for its bonus culture that rewarded excessive short term risk taking.

In Australia it was recently revealed that the Australian Securities and Investments Commission is on the verge of an investigation into the ANZ Banking Group for its part in the manipulation of the Australian bank bill swap rate by the Big Four Australian banks. Regulators across the continent are too becoming more watchful of the activity of banking institutions, with more and more regulation being developed to improve the transparency of the industry as well as combating excessive risk taking, fraud and a socially toxic culture. Globally banks have so far forked out $150 billion in fines to regulators, with more fines expected to be levelled on the industry if it does not clean up its act.

KPMG acquires Markets IT

Founded in 2011, Markets IT is an Australian boutique FinTech firm focused primarily on helping clients deal with regulatory challenges. The firm is a supplier of Murex software* in Australia – a trading platform that facilitates foreign exchange, bonds, interest rate and commodities transactions, and is used by a number of major Australian banking institutions as well as second tier lenders. The firm was set up by ex-ABN AMRO investment bankers Tim Robinson and Craig Snell, and has since grown to a staff of 25.

For KPMG the acquisitions broadens the firm’s access to Murex expertise in a time in which international and domestic regulators are increasing demands on surveillance – particularly US regulators are seeking to clean up the correspondence bank market for which Australian banks too need to be prepared. Additional benefits from the acquisition are expected to be realised in providing clients with expertise in cost-cutting, as well as how to tackle competition from other big players as well as the burgeoning FinTech sector.

As part of the deal, the value of which has not been disclosed, co-founder Robinson joins KPMG as Partner, while co-founder Snell takes up the role of Director. The staff of the company will join KPMG’s Capital Markets Technology practice, boosting the team to a total of 40 following the bolt-on.

KPMG Australia CEO Gary Wingrove says he is “delighted to welcome the team to KPMG”, adding: “Financial services organisations face an unprecedented landscape of rapid change – continual regulatory changes, heightened competition, innovation threats and opportunities, and technology changes. There has never been a greater need in the market for integrated, business-centric technology services for these clients. And effective implementation will require deep subject matter expertise in both business and technology.”

Fintech

“Our growth was driven initially as a provider of Murex services, but increasingly we’re diversifying through delivery of regulatory related technology services including trader surveillance,” remarks Robinson. “Market IT’s offering is directly complementary to KPMG’s business, regulatory and technology enablement services and strategic areas of focus. I believe the combination of business platform enablement services, together with KPMG’s brand and broader risk and transformation expertise positions us strongly to become the local market leader. We anticipate further rapid growth in the Australian market going forward.”

M&A spree
The Martkets IT marks the eleventh acquisition by KPMG Australia in the past 2 years including social media risk consultancy, SR7; the Melbourne team of Pacific Strategy Partners; an accounting practice in Karratha, WA; mining services consultancy Momentum Partners; SGA Property Consultancy; First Point Global cyber security business; accounting and advisory business Hayes Knight (WA); human rights and social impact consultancy, Banarra; Microsoft Implementation partner, Hands-on Systems; and most recently The Performance Clinic.

* Murex is a French based FinTech firm founded in 1986. The firm provides a range of platforms for the financial institutions, the platforms include integrated trading, risk management, processing and post-trade solutions.

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