KPMG has hailed 2019 as a ‘blockbuster year’ for fintech investment, despite a slight drop in the value and quantity of deals.
The accountancy giant’s latest Pulse of Fintech report showed global investment in fintech last year reached $135.7bn (£104.97bn) invested across 2,693 deals.
This was down from $141bn invested across 3,145 deals in 2018.
Despite a slight drop from 2018, investment in fintech remained more than double every year prior to 2018, KPMG said.
Most of the largest fintech deals focused on mergers and acquisitions (M&As) with fintech-focused M&A setting a new record of $97.3bn.
Both the America and Europe regions set new records for fintech investment, accounting for more than $64.2bn and $58.1bn respectively.
“We’re going to see incumbents around the world seriously re-consider their technology, stacks and how future-proof they are,” said Ian Pollari, global co-leader of fintech at KPMG.
“This is going to include looking at their core banking and origination systems and the context of their overall strategy so that they can really compete – with digital banks and emerging partnerships involving big techs and other scale providers.”
Proptech, which broadly includes innovative technology solutions focused on real estate asset and property management, saw lots of activity in 2019, equating to $2.6bn in global investment.
The report said that more real estate and property management companies are expected to embrace proptech.
“Many of the digital banks in the UK and Europe have international aspirations,” Anton Ruddenklau, global co-leader of fintech at KPMG, said.
“They’re looking to other markets in order to scale and grow.
“As they move outside of 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.”
This year KPMG expects deal sizes to continue to grow as investors focus on late stage and maturing fintechs, as well as challenger banks that look to expand their services.
The report has predicted more countries in the Asia Pacific region will develop digital banking regimes and mature fintechs will increasingly make their own investments in other emerging firms as they seek to augment their capabilities and grow in new markets.
Additionally, KPMG believes that 2020 will see more partnerships between big tech players, traditional corporates and fintechs.
“The global fintech ecosystem continued to mature over the course of 2019,” the report said.
“With major developments on the horizon, such as the increasing focus on open data opportunities, more regulatory clarity in a number of jurisdictions, growing involvement of big techs in fintech, and the ongoing evolution of technologies such as blockchain, 2020 promise to be another big year for fintech.”
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