Investment in financial technology ventures increased by 18% to hit a record high of $27.4bn (£19.9bn) in 2017, according to research by consultancy firm Accenture.
This was mostly thanks to a sharp increase in investments across the US, UK and India, while the number of deals worldwide rose significantly from 1,800 in 2016 to 2,700. Deal value jumped by around a third in the US, nearly quadrupled in the UK, and increase almost fivefold in India, underscoring the continued appetite for innovation in insurance banking and capital market startups.
“Much of the growth, particularly in the U.S. and UK, has been driven by big new investment flows from China, Russia, the Middle East and other emerging economies,” Accenture senior managing director, Julian Skan, said. “Also fuelling growth was the rapid rise of InsurTech ventures where traditional carriers see new opportunities. India’s boom was driven by strong demand for cashless services following the country’s demonetisation events.”
Some of the most sizeable deals and investments this year come from the US. Kabbage, a US online lender for small businesses, alone raised $900 million in three separate rounds in 2017. Online lender Social Finance, also known as SoFi, raised $500 million in February, and LendingPoint raised $500 million from a credit transaction in September.
In the UK, digital insurance distributor BGL Group raised $900 million, pushing overall fintech investments in the country to an all-time high of $3.4 billion. Payments venture TransferWise had the second-largest fundraising in the UK, raising $280 million.
India’s digital payments start-up Paytm received $1.4 billion in venture capital, helping drive fintech fundraising activity in the country to nearly five times the 2016 levels. The number of fintech deals in India increased 65% over 2016.
China is no longer the top destination for this capital ventures in 2017 as it was in 2016. Fintech funding in the country declined 72% in 2017, to $2.8 billion, from a record $10 billion in 2016, when several companies — including Ant Financial and wealth management platform Lufax — had multi-billion-dollar financing rounds.
“This investment reflects the soaring demand within financial services for new digital innovations, as these technologies prove their value and applicability in the market,” Accenture Financial Services group chief executive, Richard Lumb, said. “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.”