State Street Makes A Big Fintech Investment: What You Should Know

State Street Corp STT announced Friday that it will acquire Charles River Development for $2.6 billion in cash.

Why It’s Important

Charles River’s investment management solutions platform provides customers with fintech tools used to manage more than $25 trillion in assets. Charles River generated $300 million in sales in 2017.

Its front and middle office software-as-a-service capabilities will be leveraged with State Street’s own middle and back office capabilities to create an end-to-end buy-side platform, according to Friday’s press release.

D.A. Davidson analyst Peter Heckmann said in a note the deal will complement State Street’s already strong market position in the face of several changing industry dynamics. Investment management firms are under pressure to move toward passive investing, lower fees and meet higher regulatory burdens. These are all driving companies to invest in cost savings measures like automation.

What’s Next

The companies expect the acquisition to close in the fourth quarter this year pending regulatory approval.

Looking at the broader market, Heckmann said he sees the deal as a potential catalyst for other investments in fintech from big, established investment managers. EZE Software is another notable player rumored to be open to a sale that could strike a deal before the summer’s end, he said. (See the analyst's track record here.) 

Artificial intelligence, machine learning, data science. These technologies are buzz words because they’re changing our Industries, and fintech is at the forefront of that revolution. Don’t sit back and wait to see what the future of finance brings — come witness it unfolding and meet those leading the charge at the second annual Benzinga Fintech Summit in San Francisco.

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