Investment in financial technology (fintech) ventures rose sharply in most major markets in 2019, led by gains in the U.S. and U.K. and emerging economies such as India and Brazil, according to Accenture.

Despite those gains, the total value of fintech deals globally dipped 3.7 percent, to US$53.3 billion from US$55.3 billion in 2018, when totals were boosted by a record US$14 billion from Ant Financial and three other multi-billion-dollar transactions from Chinese companies.

The value of deals in the U.S. jumped 54 percent, to US$26.1 billion, with the number of transactions rising 6.9 percent, to 1,232, signaling that investors remain confident about the future growth and demand for innovative digital solutions for banks, insurers and payments providers.  

In the U.K., fintech investments rose 63 percent, to US$6.3 billion — almost the same as the total for 2018 and 2017 combined. Other European markets also made big strides, with investments in German fintechs up 83 percent in 2019, to US$1.5 billion, and fundraising in Sweden jumping more than seven-fold, to US$1.3 billion from about US$175 million.

However, there were large fundraising gains elsewhere in Asia Pacific. Investments in India nearly doubled, to US$3.7 billion, making the country the world’s third largest fintech market. The value of deals more than doubled in Singapore, to US$861 million, and rose nearly 50 percent in Australia, to US$1.1 billion.

“Despite strong demand for fintech globally, it’s likely that, as startups become more mature, investments will flow to fast-growing economies, where there’s still a huge, unaddressed consumer and corporate market thirsty for innovations,” said Julian Skan, a Senior Managing Director in Accenture’s Financial Services practice.  

Challenger banks see strong growth in fintech investments

Investments into challenger banks more than tripled in 2019, to US$5.2 billion from US$1.6 billion in 2018, led by the US$726 million raised by Italian digital bank and card processor Nexi, the US$683 million from South Korea’s NAVER Financial, and the US$700 million that Chime raised in two separate transactions in the U.S.

“With Singapore, Australia and other markets all issuing new digital banking licenses and established players like Revolut and Monzo venturing into new markets, challenger banks could remain a focus for investors in 2020,” Skan said.

The number of fintech deals globally rose 6.8 percent in 2019, to 3,472, another record level. However, this was the slowest growth rate in nine years, suggesting that activity in more-mature markets might be levelling off just as it gains steam in emerging fintech centers.