Investment in global fintech industry soars to record, says Accenture report

Global investment in financial technology ventures reached another all-time high in 2017, buoyed by a surge in funding for startups in the United States, United Kingdom and India, according to a latest report from Accenture.

Financial technology (fintech) financing throughout the world rose 18 percent to US$27.4 billion in the past year, with the value of deals in the US jumping 31 percent to US$11.3 billion. Deal values almost quadrupled in the UK to top US$3.4 billion and soared nearly fivefold in India to US$2.4 billion.

The number of fintech deals soared from just over 1,800 in 2016 to nearly 2,700 in 2017, as investors continued to scour the globe for innovation in insurance, banking and capital markets startups, according to Accenture’s analysis of data from CB Insights, a global venture-finance data and analytics firm.

Kabbage Inc, a US online lender for small businesses, alone raised US$900 million in three separate rounds in 2017.

In the UK, digital insurance distributor BGL Group raised US$900 million, pushing overall fintech investments in the country to an all-time high of US$3.4 billion.

India’s digital payments startup Paytm received US$1.4 billion in venture capital, helping drive fintech fundraising activity in the country to nearly five times the 2016 levels.

“Much of the growth, particularly in the US and UK, has been driven by big new investment flows from China, Russia, the Middle East and other emerging economies,” said Julian Skan, senior managing director in Accenture’s financial services practice.

Skan added that they saw more and more business to business fintech models proving out at the banks, coupled with larger and later-stage investments as the fintech world scales up.

The rapid rise of ‘insurtech’ ventures was another contributor to the growth as traditional carriers see new opportunities for business, the report said.

The past year saw more deals in China but fewer megadeals in the fintech space, as investors pulled back after pouring billions of dollars into giant-sized transactions, Accenture found.

Fintech funding in the country declined 72 percent in 2017 to US$2.8 billion from a record high of US$10 billion in 2016, when several companies, including Ant Financial Service Group and online wealth management platform Lufax, had multi-billion-dollar financing rounds.

During the past 12 months, the average deal size in China was US$19 million, down from US$186 million in 2016, though the country still had large transactions. For example, real estate broker Homelink raised US$440 million in April 2017 and Tuandai.com, an online finance firm, raised US$290 million in June.