UK leads the way in 2018 fintech investment

The UK leads the way in 2018 fintech investment and cemented its position within the global emerging fintech industries with the country attracting more fintech investment last year than any other part of the world.

During the first six months of 2018, Britain welcomed $16.1 billion – equivalent to £12.3 billion – of investment, followed by China, which received $15.1bn and the USA which took $14.2 bn. Furthermore, big-ticket UK fintech investment deals included four of the biggest ten across Europe; Revolut raised $250m, eToro raised $100m, Flender took $60m and Moneyfarm took $54m.

Global growth

On a global scale, fintech is growing at a considerable pace and during June-December of last year, investment over the world hit a new record at just under $58 billion for 875 new deals. This represented a 34pc increase against 2017 as a whole, which record only $38 billion in total fintech funding.

The findings were gathered by KMPG as part of their regular ‘Pulse of Fintech’ report. The consultancy’s latest datasets help to disprove the fears that Brexit may be threatening the UK’s Fintech startup scene, with venture capitalists instead looking to the country’s talent and reputation for innovation as a hotspot for investment.

The UK holds the fintech crown

With the UK now enjoying its position as the fintech leader – particularly in London which is widely viewed as being the industry’s global capital, the future looks excellent for further growth. KPMG Fintech co-lead, Anton Ruddenklau, said that the figures demonstrated a particularly strong result for the country, with bullish investment levels combining with ongoing support from the government via its Fintech Sector Strategy.

The hottest sectors for VCs

So which are the hottest fintech sectors in the UK for investment? AI and robotic process automation dominate, and regtech is also showing strong growth after the GDPR came into force. KMPG’s analysts believe that fintech will continue to be strong until the end of this year, with deals looking particularly healthy in areas such as digital identification verification, wealth management and regtetch. The UK will also be continuing to plough funding into the sector, with the recent confirmation of an additional £71m which will be pumped into London as part of a broader £780m funding package. The UK’s northern cities were recently given a similar £180m funding boost for innovation, infrastructure investment and talent development.

More challenging areas

However, other fintech areas are likely to struggle, including lending and payments, which are already mature markets and likely to see consolidation over the coming year. Of these, strong existing platforms are likely to continue to show traction in their markets, and smaller ones may struggle to achieve the scale that they need to make a profitable mark.

KPMG head of technology, Anna Scally, added that the impacts of open banking and PSD2 were also yet to be fully felt in the industry, offering opportunities and challenges for startups, financial services firms and tech innovators alike. She added that she expected to see the number of business opportunities continuing to grow as a whole, with bigger tech players working hard to more aggressively maximise their data exploitation for the creation of new opportunities. KMPG also expects to see new fintech starts ups appearing, scale-ups achieving a new degree of success and the fintech playing field generally becoming more level and with increased value add-on offer for those businesses ready and poised to take advantage of the opportunities available.

UK leads the way in a new global initiative

Meanwhile, the UK Financial Conduct Authority (FCA) has confirmed its plans to create a new global collaboration initiative to drive fintech innovation between companies and regulators. The new Global Financial Innovation Network (GFIN) will work in alliance with eleven regulators and other organisations to help fintech innovators to operate more effectively and simply with cross-market financial authorities. The GFIN will also consult on topics such as AI, blockchain, Initial Coin Offerings (OFO) and distributed ledger technology, to harness financial service innovation for the benefits of consumers everywhere.

Fintech Salary Survey 2018

Do you want to know the the current salaries being paid to executives in the c-suite? Then download our 2018 Fintech Salary Survey now.

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