Fintech Fundraising Grew Strongly in Most Major Markets in 2019, Accenture Analysis Finds

Fintech Fundraising Grew Strongly in Most Major Markets in 2019, Accenture Analysis Finds
20.02.2020 09:25 am

Fintech Fundraising Grew Strongly in Most Major Markets in 2019, Accenture Analysis Finds

Investment

Investment in financial technology (fintech) ventures rose sharply in most major markets in 2019, led by gains in the U.S. and U.K. and emerging economies such as India and Brazil, according to Accenture (NYSE: ACN) analysis of data from CB Insights, a global venture-finance data and analytics firm.

Despite those gains, the total value of fintech deals globally dipped 3.7%, to US$53.3 billion from US$55.3 billion in 2018, when totals were boosted by a record US$14 billion from Ant Financial and three other multi-billion-dollar transactions from Chinese companies.

The value of deals in the U.S. jumped 54%, to US$26.1 billion, with the number of transactions rising 6.9%, to 1,232, signaling that investors remain confident about the future growth and demand for innovative digital solutions for banks, insurers and payments providers. The largest portion of U.S. funding went to lending startups and those in payments, each accounting for 26% of the total, while insurtechs took in another 18%. The country’s largest deal was the US$1 billion that consumer finance fintech Figure Technologies Inc secured from a credit facility in May.

In the U.K., fintech investments rose 63%, to US$6.3 billion — almost the same as the total for 2018 and 2017 combined. Other European markets also made big strides, with investments in German fintechs up 83% in 2019, to US$1.5 billion, and fundraising in Sweden jumping more than seven-fold, to US$1.3 billion from about US$175 million.

The value of deals in Brazil nearly tripled, to US$1.6 billion, making the country the world’s fifth-largest fintech fundraising center.

Fintech deals in China dropped 92% in 2019, to US$1.9 billion, with the US$145 million financing from insurtech Shuidi Huzhu in June being the country’s largest transaction. Most of the decline was due to China’s record-breaking fundraising in 2018, which saw four deals alone bringing in nearly US$20 billion.

However, there were large fundraising gains elsewhere in Asia Pacific. Investments in India nearly doubled, to US$3.7 billion, making the country the world’s third largest fintech market. The value of deals more than doubled in Singapore, to US$861 million, and rose nearly 50% in Australia, to US$1.1 billion.

“Despite strong demand for fintech globally, it’s likely that, as startups become more mature, investments will flow to fast-growing economies, where there’s still a huge, unaddressed consumer and corporate market thirsty for innovations,” said Julian Skan, a senior managing director in Accenture’s Financial Services practice. “For now, there’s still a lot of growth, particularly for challenger banks that are expanding in their home markets and overseas, as well as for payments providers that are embedding solutions seamlessly into our day-to-day activities.”

Challenger banks see strong growth in fintech investments

Investments into challenger banks more than tripled in 2019, to US$5.2 billion from US$1.6 billion in 2018, led by the US$726 million raised by Italian digital bank and card processor Nexi, the US$683 million from South Korea’s NAVER Financial, and the US$700 million that Chime raised in two separate transactions in the U.S.

In Brazil, investors poured US$400 million into the country’s largest fintech, Nubank, and US$344 million into rival Banco Intermedium. In addition, Germany’s N26 raised US$470 million from two separate deals, and U.K. neobanks Monzo and Starling Bank raised US$144 million and US$211 million, respectively, the latter from two separate transactions.

“With Singapore, Australia and other markets all issuing new digital banking licenses and established players like Revolut and Monzo venturing into new markets, challenger banks could remain a focus for investors in 2020,” Skan said.

Investments into payments startups and lending startups took the bulk of global fintech fundraising, accounting for 28% and 25% of the total, respectively, while insurtechs raked in 13%.

Number of deals rises globally to record level, but growth rate slows

The number of fintech deals globally rose 6.8% in 2019, to 3,472, another record level. However, this was the slowest growth rate in nine years, suggesting that activity in more-mature markets might be levelling off just as it gains steam in emerging fintech centers.

For instance, the number of deals grew only 6.9% in the U.S. and 2% in the U.K. On the other hand, Asia Pacific saw much higher growth in deal volumes — 11% in Japan, 16% in Australia and 52% in Singapore — as did Europe, with gains of 37% in Germany and 79% in Sweden.

“The healthy growth in activity bodes well for the near-term outlook of the fintech industry, particularly as we see more established players interested in implementing the newest technologies through partnerships with startups, which are also eager to launch their solutions to incumbent financial firms’ large consumer base,” said Piyush Singh, a senior managing director at Accenture who leads its Financial Services practice in Asia-Pacific and Africa.

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