Global Investment in Fintech at Record High in 2017: Accenture
Globally, fintech investment rose by 18 per cent in 2017, and the number of fintech deals increased from 1,800 in 2016 to almost 2,700 in 2017.
Funding for start-ups in the United States, United Kingdom and India led to an all-time high in global investment in financial technology in 2017, according to an Accenture report.
In 2017, investment in the United States was the highest at $11.3 billion, followed by the United Kingdom at $3.4 billion, and India at $2.4 billion. Globally, fintech investment rose by 18 per cent in 2017. In the United States, it rose by 31 per cent, quadrupled in the UK, and grew five times in India. The number of fintech deals increased from 1,800 in 2016 to almost 2,700 in 2017.
“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,” Julian Skan, senior managing director in Accenture’s Financial Services practice, said in the report.
The surge in funding grew in India because of the demand for cashless services following the country’s ‘demonetization’ period. Paytm, a digital payments start-up, received $1.4 billion in venture capital in one of the biggest deals.
In November 2016, the Government of India had withdrawn all currency of Rs 500 and Rs 1,000 to combat corruption. That period, during which bank notes were limited, prompted a shift towards mobile payments and other cashless service providers like Paytm.
In China, fintech funding fell by 72 per cent in 2017 to $2.8 billion from $10 billion in 2016.
Between 2010 and 2017, global investment in fintech ventures reached $97.7 billion. Startups in the United States made up 54 per cent of all investments. In that time period, volume of fintech deals globally rose at a compound annual rate of 35 per cent, with total funding growing at a compound annual rate of 47 per cent.
“This volume of investment reflects the soaring demand within financial services for new digital innovations, as these technologies prove their value and applicability in the market,” said Richard Lumb, group chief executive —Financial Services at Accenture. “That will continue to position fintechs for a vital role in helping reshape the financial services landscape. For markets like the UK, where slower economic growth and industry uncertainties due to Brexit have been an issue, it is an encouraging sign.”
In the United States, Kabbage Inc — an online lender for small business — raised $900 million in three separate rounds in 2017. Online lender Social Finance Inc, also known as SoFi, raised $500 million in February, and LendingPoint raised $500 million from a credit transaction in September. In the United Kingdom, digital insurance distributor BGL Group raised $900 million and Payments venture TransferWise had the second-largest fundraising in the country, raising $280 million.
In India, Paytm’s fundraising was the largest one. Paytm raised $1.4 billion from SoftBank Group Corp. Alibaba Group Holding Ltd. and its financial affiliate Ant Financial held 40 per cent in One97 Communications, Paytm’s parent company.
“India has presented us with the world’s largest opportunity in terms of financial services and we are confident its market will grow exponentially over the next decade,” Eric Jing, chief executive officer of Ant Financial, had said earlier, according to Bloomberg.