Investment into business-facing fintechs doubles in two years

ALMOST half of European investment in fintech over the past year has been directed towards business-to-business (B2B) firms, including peer-to-peer lenders, a report suggests.

Findings from a report by Magister Advisors and Innovate Finance, called The State of European FinTech: Current trends and predictions, found the percentage of investment in B2B firms, encompassing business P2P platforms, had doubled from 26 per cent in 2015 to 49 per cent this year.

“This is due to many factors, including regulation, increased collaboration and emerging technologies,” said the report, which was released on Tuesday.

The study also investigates how fintech firms are adapting to maintain profitability, citing Zopa’s application for a banking licence as an example.

“Banking licences allow fintechs to roll out multiple products, in order to compete with incumbents more successfully and better monetise their existing customer base,” the report said.

“As a result, there is a proliferation of ‘non bank banks,’ some of whom will evolve into fairly large digital-only banking entities to rival traditional banks.”

Read more: UK fintech is at critical juncture and needs support, says Innovate Finance

The report notes that $2bn was invested in European fintech over 43 deals in the 12 months to August 2017, up from $845m of investment across 21 deals last year.

More than $8bn has now been invested in European fintech since 2010, according to the report, which also claims some investors may now be looking for an exit.

“The results of the joint Magister Advisors and Innovate Finance report reaffirm a robust and growing European fintech ecosystem,” Charlotte Crosswell, chief executive of Innovate Finance, said.

“Unlocking liquidity for fintech M&A exits or IPOs will be a key issue in our ecosystem as fintech enters its more mature phase.”

Read more: Chancellor sets out commitment to UK fintech