Fintech goes from strength to strength

Recent report shows continued funding for fintech companies

According to the KPMG Pulse of Fintech report (2017), the amount of funding for fintech companies has come to about $122 billion during the past three years. There have also been a spate of M&A transactions helping small businesses grow, and also allow established companies leverage fintech expertise and disruptive technologies. The first half of 2018 saw a large increase from H1 2017, with US$58bn invested across 875 deals.

The current environment seems ideal for fintech as consumers use their smartphones for a wide-array of activities. What’s more, there are core technologies that allow for better financial transactions and systems, such as AI (Artificial Intelligence), Big Data, cloud computing and blockchain systems.

More from the KPMG report

Global fintech investment roared ahead at a record pace in the first half of 2018, with US$57.9B invested across 875 deals, a significant increase from the US$38.1B invested in all of 2017, according to the KPMG Pulse of Fintech report (H1 2018).

Highlights of the first half included the successful closing of two massive deals: the record-setting US$14B raise by Ant Financial in Q2'18 and Vantiv's acquisition of WorldPay for US$12.9B in Q1'18.

Overall deal volume was robust, rising from 834 in H2'17 to 875 deals in H1'18. Further, global median size of late-stage venture financings rocketed to US$25M during H1'18, up from the US$14M annual median size seen in 2017. Early stage deal size jumped as well, from a median of US$5M in 2017 to US$9.2M at the mid-point of 2018.

"The global fintech market has advanced considerably over the past few years,” says Ian Pollari, Global Co-Lead, KPMG Fintech. “As the sector matures, investors have shifted from experimenting with fintech to seeking out value-driven opportunities. This is particularly true for corporates who continue to invest and see fintech as a strategic play that will help accelerate their digital transformation agendas.”

According to KPMG, venture capitalists remain excited about funding fintech start-ups across a wide range of fintech subsectors, but M&A activity is also growing as more mature fintechs seek exits. Current M&A activity has easily matched the most active M&A periods seen to date.  

Strong outlook expected for fintech investment

With a significant amount of capital waiting to be deployed, a growing diversity of fintech hubs across the globe, and more and more corporates looking to leverage fintech in order to drive innovation, investment in fintech is expected to remain strong heading into the second half of 2018.   Numbers for Q3 2018 are expected in early October.

(With credit to KPMG for these fintech statistics)