MORE THAN $4.2bn (£3.02bn) was invested in UK-based fintech companies last year, up from $0.7bn in 2016.
According to the latest KPMG Pulse of Fintech report, the UK now accounts for more than half of the total European market ($7.2bn) and 14 per cent of the global total ($31bn).
“The UK’s fintech market remains remarkably resilient,” said Anton Ruddenklau, partner and head of digital and innovation, financial services, at KPMG UK. “The final quarter of 2017 saw the most deal activity since 2014, largely driven by payment companies.
“As we enter a world of open banking, I expect that to continue. Large financial institutions still have deep investment pockets, the big banks want to get involved in fintech and acquire start-ups to help meet their growth ambitions. We’re likely to see more purchasing than investment through 2018.”
Last year, fintech investments were driven by a combination of private equity deals and venture capital fundraising. There were a record-breaking 139 private equity deals across 2017, generating more than $17bn in fintech funds.
Read more: Record year for UK fintech VC investment
Corporate investing also picked up, accounting for 19 per cent of all VC deals last year. However, corporate participation amounted to just $5.4bn globally, compared with $9.7bn the previous year.
KPMG’s report also confirmed that the US still dominates global fintech investment, with $5.9bn invested in the fourth quarter of 2017 alone. By contrast, Asia-based fintech funding is on the decline. Just $3.85bn was invested in Asian fintech companies in 2017 – down from more than $10.8bn in 2016.
“The fintech market is continuing to expand and evolve,” said Murray Raisbeck, global co-lead for fintech at KPMG. “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.”