Strong investment of US$8.7B in Q4’17 propelled global fintech funding over the US$31B mark for 2017.
Strong investment of US$8.7B in Q4'17 propelled global fintech funding over the US$31B mark for 2017, sustaining the high level of investment seen in 2016, according to the KPMG Pulse of Fintech report. This brings the total global investment in the fintech sector over the past three years to US$122B. While global fintech deal volume declined in Q4, the number of venture capital (VC) transactions exceeded 1,000 for the fourth consecutive year in 2017, with private equity (PE) deals reaching a new high of 139. Fintech M&A also ticked up for the year with 336 transactions in 2017.
Among fintech sub-sectors, both insurtech and blockchain saw record levels of VC investment and deal volume in 2017, with insurtech accounting for US$2.1B across 247 deals and blockchain generating $512M of investment across 92 deals.
Geographically, the US accounted for almost two-thirds of global fintech investment in Q4'17, with $5.8B in funding raised, and almost half of the full-year 2017 global total, with US$15.2B raised for the year. M&A accounted for the majority of this funding, with US$8.7B in deals in 2017. US PE funding in Q4'17 achieved its second highest quarter ever at US$3.4B.
Fintech investment in Europe reached over US$2B in Q4'17, with VC investment achieving a new record of US$960M - while total investment for 2017 reached US$7.44B. In Asia, fintech investment moderated to US$748M for Q4'17, to reach only US$3.85B for all of 2017, after more than US$10B in funding in 2016.
“The global fintech market has advanced considerably over the past few years,” says Ian Pollari, Global Co-Lead, KPMG Fintech. “As the sector matures, investors have shifted from experimenting with fintech to seeking out value-driven opportunities. This is particularly true for corporates who continue to invest and see fintech as a strategic play that will help accelerate their digital transformation agendas.”
Key 2017 annual highlights
Key Q4'17 highlights
Fintech funding in the Americas rose slightly quarter over quarter, with US$5.9B invested across 168 deals. In total for 2017, the Americas saw US$19.8B invested across 711 deals.
While the US accounted for the lion's share of fintech investment, with US$5.8B invested across 149 deals during Q4'17, Brazil had an excellent showing, with a US$50M raise by Creditas breaking into the top 10 fintech deals in the region.
Europe saw over US$2B in total fintech funding across 94 deals in Q4'17, while total European fintech funding for all of 2017 was US$7.44B across 446 deals.
For the third straight quarter, Europe reached a new high for VC investment in fintech, with US$960M across 68 deals. Despite ongoing economic uncertainty related to Brexit, the UK continued to see resilience in its fintech market - accounting for US$1.6B of Europe's total investment.
After a solid US$1B+ quarter in Q3'17, total fintech funding in Asia declined to US$748M across 38 deals in Q4'17. VC funding faltered considerably in the region, dropping almost 50 percent quarter over quarter to US$550M. Decreased fintech investment in China accounted for much of the decrease in investment in Asia. China saw just US$45.8M in investment in Q4'17, while total investment in 2017 was US$1.33B.
On an annual basis, total fintech funding in Asia was US$3.85 billion in 2017 - a massive drop-off from the more than US$10B invested in 2016. On the positive side, corporate participation in fintech deals skyrocketed in Asia during Q4'17, rising from a twelve-quarter low of 11 percent in Q3'17 to reach a new high of over 31 percent.
“The fintech market is continuing to expand and evolve,” says Murray Raisbeck, Global Co-Lead, KPMG Fintech. “So much is happening - from the increasing focus on insurtech and blockchain, to the ramifications of maturing companies, such as challenger banks, looking to expand and grow. With regulations changing, particularly in Europe, 2018 will likely be an exciting year.”
Lauren M. Mostowyk
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The Financial Services industry is transforming with the emergence of innovative new products, channels and business models. This wave of change is driven by evolving customer expectations, digitalization, as well as continued regulatory and cost pressures. We are passionate about supporting clients to successfully navigate this transformation, mitigating the threats and capitalizing on the opportunities. KPMG Global Fintech comprises professionals in over 35 fintech hubs around the world, working closely with financial institutions and fintech companies, to help them understand the signals of change, identify the growth opportunities and to develop and execute on their strategic plans.
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