The banking sector remains poised for potential transformation in regulation and deal-making activity, by our count, even as the industry is jostled by economic uncertainty and policy shifts from day to day.
Initially, the expected business-friendly agenda of the new administration fostered optimism, with high-level assumption of a more accommodating regulatory environment. However, changing policies on tariffs and other activities have introduced uncertainties, tempering enthusiasm in some sectors. Still, within banking, leadership changes and regulatory easing could drive innovation, particularly in financial technology and digital assets, while resilience and risk management will remain focal points.
Regulatory and economic uncertainties
The administration’s policies by its own claims, aim to stimulate economic growth. Yet they bring a mix of opportunities and challenges, according to most economists. Deregulation and energy independence initiatives were supposed to drive down the 10-year Treasury yield, but opposing pressures—such as tariffs and a ballooning budget deficit—may lead to inflation and higher interest rates, complicating the operating landscape for banks.
The potential for cross-border transactions is similarly uncertain. While global organizations may seek U.S. expansion to hedge against tariff volatility, a protectionist stance from the administration could also curb such deal activity. And the dollar’s safe-haven reputation could be at risk.
Despite these uncertainties, global M&A appears to be rebounding. This is evident on Datasite, which facilitates about 19,000 new deals annually. New global deal kickoffs of asset sales or mergers on Datasite rose 14% in January and 9% in February compared to the same periods last year. Since these are deals at inception, rather than announced, it can provide a good indication of what’s ahead.
Regionally, North American deal launches on Datasite in the first two months of this year rose 6% compared to the same time a year ago, fueled by a booming technology, media and telecommunications (TMT) sector and strong growth in healthcare and consumer industries. In other sectors, industrial activity grew in January but then pulled back in February, potentially due to paralysis over tariffs. Hold rates and diligence times are also rising, and deal closures are falling. This may reflect North American dealmakers potentially waiting to see what happens with interest rates and other key economic indicators.
AI and fintech: The driving force of M&A
Much of the activity in TMT is being driven by investment in artificial intelligence (AI) assets. As businesses increasingly integrate AI into their operations, the appetite for M&A grows. Banks are no exception. They are increasingly acquiring AI startups or forging partnerships with fintech firms to remain competitive without having to build AI capabilities in house.
Yet AI isn’t just shaping investment strategies but also redefining the M&A process itself. AI-powered tools enhance data analysis and streamline due diligence by efficiently sorting, summarizing, and categorizing critical documents. By surfacing key contractual clauses and obligations, these tools significantly reduce the time and resources required for deal execution.
Additionally, AI-driven applications can help buyers identify potential M&A targets by triangulating private, public and paid data sources, positioning acquirers to integrate new capabilities seamlessly post-merger.
Balancing innovation and compliance
As AI adoption in M&A accelerates, demand for regulatory scrutiny is increasing. Dealmakers must tread carefully, balancing the advantages of AI with evolving compliance requirements.
With two-thirds of global dealmakers prioritizing AI exploration in 2025 and many citing productivity gains of up to 50%, the momentum is undeniable. However, staying ahead of regulatory shifts will be critical for firms leveraging AI-driven deal-making strategies.
The future of banking: Adapt or lag behind
AI is already reshaping risk assessment, fraud detection, and customer service, allowing fintechs and technology firms to offer faster, cheaper and more personalized financial solutions.
Traditional banks that fail to integrate AI effectively risk falling behind their more agile competitors. As the banking sector moves forward in 2025, those that successfully harness AI, adapt to shifting regulations, and capitalize on M&A opportunities will be best positioned for sustained growth and innovation.
Mark Williams is Chief Revenue Officer for Datasite Americas.
