How PE-backed financial services firms can grow in times of change

Uncertainty in financial services isn’t slowing down—but that doesn’t mean growth is off the table. For private equity (PE)-backed firms, now’s the time to rethink strategies, modernize operations, and move fast on opportunities others are hesitating to pursue. 

Key takeaways 

• Redefine your merger and acquisition (M&A) approach to reduce regulatory friction and accelerate growth through more efficient, lower-risk deals. 

• Modernize operations with scalable technology that reduces costs, improves performance, and sets the stage for long-term value. 

• Take the lead on transparency and trust—because reputational risk is yours to own in a shifting regulatory environment. 

The financial services industry is changing fast due to shifting regulations, economic pressures, and evolving market dynamics. For PE-backed organizations like regional banks, fintechs, insurance and wealth management firms, this brings both new challenges and new opportunities. Companies that act quickly and decisively in adapting to the current environment will be well positioned to lead in their respective sectors. 

Here’s a closer look at what’s changing—and how organizations can turn change into a competitive advantage. 

What’s influencing the financial services landscape 

Recent macroeconomic shifts—including tariff pressures, inflation, and high-interest rates—are redefining the financial services space. At the same time, regulatory shakeups, such as the potential dismantling of the Consumer Financial Protection Bureau (CFPB) and continued FTC scrutiny on M&A activity are only increasing uncertainty. Here’s how these challenges are impacting the financial services industry: 

Prolonged approval timelines 

Regulatory bodies like the FTC are increasing scrutiny on M&A deals, which leads to longer approval timelines and higher deal costs. 

Inflation and rising costs  

Persistently high inflation has raised operating expenses, compounded by elevated interest rates. 

Consumer oversight 

With the potential dismantling of the CFPB, companies that fail to self-regulate risk losing their consumers trust and ultimately, their reputation. 

While it’s important to be aware of these challenges, forward-thinking organizations should also view this moment as a chance to take strategic, innovative steps that build resilience and position themselves for long-term success.  

Five opportunities to increase value in uncertain markets 

Even in unpredictable environments, opportunities exist. For PE-backed financial services organizations, focusing on strategies that create long-term value and reduce exposure to risk is a great place to start. Here are five areas of focus that can strengthen your value and position in the market. 

1. Redefine your M&A strategy 

In challenging environments, large-scale deals come with more risk. PE-backed financial services firms should consider targeting smaller, less complex acquisitions that allow for faster execution and reduced regulatory exposure—while prioritizing organic growth.  

Reevaluating the M&A pipeline to focus on value-creating deals can help avoid unnecessary delays. By investing in pre-deal preparation, firms can streamline regulatory approval processes and minimize roadblocks. Then, after the deal closes, the focus should shift to strategic growth investments that maximize the long-term value of each deal. 

2. Improve cost efficiency through tech modernization 

With rising costs and inflation, operational efficiency is more critical than ever. AI-driven automation, cloud-based solutions, and advanced analytics are transforming how financial services organizations operate. Here’s what that can look like in action: 

Regional banks: Scale operational costs across larger asset bases by upgrading core banking systems and automating loan servicing workflows. 

Fintechs: Invest in application programming interfaces (APIs) and microservices to rapidly deploy new products and deliver customer value faster. 

Insurance: Modernize existing technology stacks and leverage new APIs and microservices to create new adjacent product and services to quickly enter new markets 

Wealth management firms: Build or acquire scalable platforms that reduce administrative burdens and offer clients access to valuable insights. 

To see real impact, organizations need to start by identifying inefficiencies across core functions like compliance, accounting, and customer service. Modernizing these processes with integrated platforms and automation tools can drive meaningful efficiency gains. Just as critical is building a scalable tech infrastructure that supports long-term growth and enables faster innovation across products and services. 

3. Expand into underexplored lending markets 

With reduced regulatory constraints tied to the potential dismantling of the CFPB, financial services firms have an opportunity to explore lending markets previously avoided due to compliance risks. Subprime lending, payroll financing, and other once risky areas now present opportunities for diversification and higher returns. 

But trust and transparency will be critical. While these markets carry risk, they offer significant upside for firms that prioritize ethical practices and establish strong standards. 

To take advantage of these new lending opportunities, firms should evaluate underserved markets and align expansion strategies with their internal risk tolerance. Implementing strong, customer-focused risk management and transparency measures—not just relying on regulators—can help build trust and reduce reputational risk. Leveraging advanced data analytics can further improve decision-making and help assess risk more accurately in these untapped areas. 

4. Strengthen customer relationships 

Maintaining trust and loyalty is critical as customer protections potentially weaken. Proactively addressing customer concerns while upholding ethical practices gives organizations a significant competitive advantage. 

Without external regulations enforcing compliance, the responsibility falls on financial services firms to self-regulate effectively. Delivering exceptional customer experiences through personalized communication and transparency will help you stand out as a trusted leader in your market. 

Building stronger customer relationships starts with investing in AI-driven tools that enable smarter, more personalized engagement, and establishing clear self-regulation policies that reinforce transparency and reduce reputational risk. Additionally, leveraging customer feedback loops ensures continuous service improvements and elevates satisfaction and loyalty in a shifting regulatory environment. 

5. Leverage buy and build strategy with a focus on wealth management and insurance 

Wealth management and insurance have become a hotbed for PE interest, thanks to its fragmented nature and strong scalability potential. Recent PE acquisitions highlight the appeal of buy-build strategy that take advantage of leveraging economies of scale. 

These platforms also offer exciting opportunities to integrate data analytics to optimize financial portfolios and improve fee transparency, further enhancing the overall client experience. 

Organizations should focus on wealth management and insurance firms with strong customer relationships and flexible platforms ready to scale. By centralizing back-office functions, they can reduce operational redundancies and improve cost efficiencies. Using data-driven insights will support the development of new products, improve portfolio optimization, and deliver greater value to a broader client base. 

Actionable strategies to establish future success 

To capitalize on emerging opportunities, PE-backed financial services firms must prepare proactively and strategically for what lies ahead. Here’s where leaders should focus now to create growth and lasting value: 

Make operational efficiency non-negotiable  

Streamline internal processes from core workflows to talent deployment. By outsourcing or automating repetitive tasks and carefully managing operational costs, leaders create space to invest in growth. 

Invest in scalable technology  

Technology will define tomorrow’s leaders. From cloud platforms to advanced analytics, ensure your organization is built for growth by prioritizing scalable tech solutions in your budget. 

Build an agile workforce  

Your greatest asset is your people. Redeploy talent to new growth areas as needs evolve, using training programs to develop cross-functional, future-ready teams. 

Be exit ready  

Exits may take time, but preparation starts now. Align internal processes with market expectations to maximize valuations when opportunities arise. 

Revisit compliance frameworks  

While deregulation brings flexibility, it’s also a crucial time to establish internal safeguards that protect your reputation and maintain consumer confidence. 

Turn your challenges into opportunities with the right partner 

The financial services industry is facing big challenges—but management teams in regional banking, fintech, and wealth management also have major opportunities to develop competitive advantages. Success comes from strategic pivots, whether through targeted M&A, operational overhauls, or adapting to emerging trends. 

Highspring’s integrated consulting services empower PE-backed financial services organizations to modernize systems, streamline processes, and achieve cost-effective growth. Are you ready to future-proof your business and turn challenges into lasting opportunities? Highspring has the technology and industry experience to help you get started. Contact our PE and financial services experts today to take the first step toward confident, strategic growth. 

FAQ: How PE-backed financial services firms can grow in times of change