ThePulse of Fintech 2018

2018 end-of-year edition of KPMG’s The Pulse of Fintech — a biannual report highlighting key trends and activities within the fintech sector globally and in key markets around the world.

Fintech investment increased substantially in 2018, with total global investment dollars across M&A, PE and VC more than doubling from $50.8 billion in 2017 to $111.8 billion in 2018.

Mega deals throughout the year — including Vantiv’s acquisition of Worldpay for $12.86 billion in Q1, Ant Financial’s record-shattering VC raise of $14 billion in Q2, and PE firm Blackstone’s $17 billion investment in Refinitiv in Q3 — helped to spur interest and activity in the fintech market.

The Americas, Europe and Asia all saw significant growth in fintech investment, although the total number of deals globally only increased slightly. This modest increase was driven primarily from the US and the Americas, where deal volume saw solid increases year-over-year.

Both Asia and Europe saw a decline in their fintech deal volume, mirroring a trend seen across the broader investment market.
M&A and buyouts accounted for the largest fintech investments during the year in both the Americas and Europe, while VC investments reigned supreme in Asia. At a technology level, payments and lending continued to attract the most significant investment dollars globally, although insurtech and regtech were also quite high on the radar of investors.

The outlook is positive for fintech investment heading into 2019, in part due to the strong and highly diverse fintech hubs cropping up around the world, as well as growing recognition from both incumbents and scaled fintech companies that M&A is an important part of their growth strategies. There is likely to be an increase in investment focused on solutions targeted to the needs of unbanked and underbanked people in the developing world, including southeast Asia and Africa, even as more developed regions see a growth in fintechs that can reduce operating costs, improve service quality and expand customer reach.

We discuss these and a number of other trends in this edition of the Pulse of Fintech, in addition to examining other questions driving interest in the fintech market globally, including:
― Why is global growth pivotal for fintech success?
― Will regtech be the next big fintech play?
― How are corporates reshaping the fintech industry?
― How is blockchain investment evolving into a product play?

 

Global
― In 2018 global investment in fintech companies hit $111.8 billion with 2,196 deals
― Global fintech investment more than doubled, led by three mega 10 billion+ deals
― Global median venture pre-money valuation for late stage investment doubled to $207 million
― Corporate venture capital (CVC) investment in fintech topped $23 billion, more than double 2017
fintech CVC of $10.3 billion
― Global cross-border fintech M&A activity reached $53.5 billion in 2018 from $18.9 billion in 2017
― Regtech investment more than tripled from $1.2 billion in 2017 to $3.7 billion in 2018
― Investment in blockchain and cyrptocurrency stayed steady at $4.5 billion

 

Americas
― In 2018 fintech investment in the Americas reached $54.5 billion across 1,245 deals
― US dominates fintech investment in Americas, although Latin America sees growth
― Median pre-money venture valuation size for late stage investment nearly doubled
― Brazil saw a record Q4, bolstering fintech investment to $555.9 million in 2018
― Canada hit a record of 119 fintech deals in 2018, bringing in $1.18 billion of investment

 

US
― In 2018, US fintech companies received $52.5 billion in investment driven primarily by
M&A activity
― Refinitiv deal propels US-based fintech investment to record high in Q4’18
― M&A skewed toward smaller enterprises while late-stage valuations nearly double
― Top deals were found mostly on the East Coast — with New York and Massachusetts
leading the way

 

Europe
― In 2018 investment in fintech companies in Europe hit $34.2 billion with 536 deals
― Strong M&A activity nearly triples total fintech investment in Europe
― PE fintech investment rose to $1,624.5 million in 2018 from $356.8 million
― Median M&A size in Europe increased from $23.7 million in 2017 to $62.5 million in 2018
― The UK remains the leader in Europe accounting for half of the top 10 deals

 

Asia
― In 2018 investment in fintech companies in Asia hit $22.7 billion across 372 deals
― Ant Financial’s $14 billion round in H1 was a massive outlier
― Fintech CVC-related investments tripled to $17.3 billion
― Fintech investment in Singapore increased to a new high of $346.6 million
― Global expansion and investment a top priority for Chinese fintechs and big techs

All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook unless otherwise specified.

 

 

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