A slowdown at the end of 2015 failed to derail a bumper year for fintech as investors ploughed $13.8bn into startups in the sector across the globe - more than double the amount of the previous year.
Investors made greater bets on disruptive technology in the finance sector than ever before, committing more money to each deal. The number of mega-deals - those worth more than $50m - surpassed 60 for the first time globally, compared to just 15 between 2011 and 2013. However, the year ended with the lowest number of overall deals since the start of 2013, mirroring a cooling-off across the technology sector, the new figures from KPMG and CB Insights reveal.
Europe weathered the slowdown better than the US and Asia as the value of deals fell 30 per cent on the previous quarter, compared to 64 per cent and 75 per cent respectively. But that slowdown is unlikely to last for long in fintech, the latest Pulse of Fintech report concluded.
"While caution is expected to continue to be a trend over the next few quarters, fintech interest is not likely to be held back for long. For the short-term, corporate investment in fintech will likely take center stage as corporates pursue longer term objectives associated with the perceived value that fintech can provide to their own organisations," it said.
Corporate investors, including those in financial services, telecoms and technology, are more active than ever before and were involved in one in four global fintech deals in three out of four quarters last year. Citigroup was the largest corporate bank investing in global fintech in 2015, followed by Goldman Sachs and JP Morgan.
In Europe, however, they counted for just 15 per cent of deals last year and only 10 per cent in the fourth quarter - less than both the US and Asia. This could reflect banks’ focus on other major monetary issues in Europe beyond technology innovation, the report speculates.
"Over the next few years, fintech investment is expected to continue to grow in Europe, with corporate investors potentially taking more interest as other monetary and macroeconomic issues in Europe settle down," the report predicts. "At the same time, insurance-tech as an industry is likely to grow, with many insurance companies in Europe ripe for the same levels of transformation as banking."