Another massive year for global fintech investment, led by record Q3’19
Global fintech investment in 2019 fell just shy of 2018 results, with $137.5 billion invested across 2,693 deals. Despite the slight drop, fintech investment remained more than double every year prior to 2018 — highlighting the enormous strength of the global fintech market. Two deals drove a very significant proportion of this investment: the $42.5 billion acquisition of Worldpay by Fidelity National Information Services (FIS) and the $22 billion acquisition of First Data by Fiserv.
M&A activity globally highlighting increasingly competitive fintech environment
With the exception of India-based Paytm’s $1.7 billion funding round, the largest fintech deals in 2019 were focused on M&A – with fintech-focused M&A setting a new annual record of $95.1 billion. The largest M&A deals of the year occurred across a diversity of countries. In addition to the UK (WorldPay) and US (First Data, Dun & Bradstreet and Assurance IQ), other countries that saw large M&A deals this year include Estonia (AliExchange), France (eFront), Australia (Property Exchange Australia) and Italy (SIA (Milan)).
We’re going to see incumbents around the world seriously re-consider their technology stacks and how future-proof they are. This is going to include looking at their core banking and origination systems in the context of their overall strategy so that they can readily compete — with digital banks and emerging partnerships involving big techs and other scale providers.
Americas and Europe set new records for fintech funding; Asia holds steady
Both the Americas and Europe set new records for fintech investment in 2019, with the Americas accounting for over $64.2 billion and Europe accounting for $58.1 billion — although more than half of Europe’s investment came from the single Worldpay transaction. While Asia saw a decline in fintech investment year over year, results were quite steady compared to historical norms outside of the outlier Q2’18.
Many of the digital banks in the UK and Europe have international aspirations. They’re looking to other markets in order to scale and grow. As they move outside the UK, they’re followed by a number of European infrastructure providers — core banking platform providers looking to provide software-as-a-service models in those same jurisdictions. It’s an exciting time for growth in fintech.
Trends to watch globally
Fintech investment is well-positioned to grow in 2020, particularly with the growing proliferation of fintech hubs globally, not to mention the ever-widening scope of fintech offerings. While the payments space is expected to remain very hot, other areas of fintech are also expected to grow including B2B-focused solutions and AI-driven solutions.