The “KPMG Pulse of Fintech” report shows that the total value of investment into UK fintech reached $1.4 billion in the second quarter of this year, up from $0.1 billion in the same period in 2016.
“Fintech investment has made a comeback this quarter particularly in the US and Europe. However, the outlook for the UK is especially exciting as we wait to see just how much innovation Brexit will drive,” said Murray Raisbeck, global head of fintech at KPMG.
Raisbeck explained that as banks, insurers, and asset managers reassess their business models, they will need innovative tech solutions for everything – from establishing a new office to engaging with staff and customers.
Anna Scally, partner and fintech leader, KPMG in Ireland, added: “As a hard Brexit remains a possibility, many financial services companies licensed in London have started searching for possible alternative locations for operations, with Ireland, Luxembourg, and Germany all high on the list.”
She continued, “Yet, while regulators are pushing major banks and insurers to come up with a ‘Plan B’, fintechs haven’t been as quick off the mark. Expect to see fintechs increasingly focused on examining their options over the next six to 12 months.”
Key global 2Q17 highlights
- Total fintech investment increased from US$3.6 billion in Q1’17 to US$8.4 billion in Q2’17.
- VC funding remained solid globally with US$2.5 billion invested across 227 deals.
- At mid-year, the global median VC fintech deal size of US$12 million for late-stage deals was substantially lower compared to the 2016 total of US$18 million. The median deal size was up for angel/seed stage deals (US$1.3 million) and for early-stage rounds (US$6.2 million).
- Corporate VC investment in fintech is on pace to near 2015’s total, with US$2.6 billion invested in deals with corporate participation by the end of 2Q17, compared to US$9 billion in all of 2016, which was skewed by mega-deals. Corporate participation in fintech deals by volume is also up – with 21% participation in 2017 deals so far compared to 17% in 2016.
- Investment in regtech was up significantly in 2Q17, with the US$591 million invested in the first half of 2017 already exceeding the US$583 million raised during all of 2015, and on pace to significantly exceed 2016’s total by year end.
- Business-to-business (B2B) fintech companies are getting a significant amount of attention, with three companies in the top10 global fintech deals this quarter: CCH Tagetik (US$321 million), Pos Portal (US$158 million) and ITRS Group (US$140 million).
Source: KPMG Pulse of Fintech
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