The LTP report Investments, Funding & Acquisitions in payments talks about the trends in funding and investments in FinTech industry.
Given the diverse factors driving the evolution of fintech globally, it’s not unforeseen that investments into VC-backed fintech companies are to grow significantly in coming years. Global investment in financial-technology (fintech) ventures tripled from $4.05 billion in 2013 to $13.8 billion in 2015. This increase is more than 100% compared to previous year investments. Deal volume also increased, from 586 in 2014 to 653 in 2015. The interest of VC investors in fintech is gaining momentum, with average deal size going up dramatically compared last couple of years. It appears VC investors are committing more money to fintech with the belief that banking and insurance are industries up for change.
While VC investors are becoming more cautious overall, corporates are also expected to keep interest in fintech high over the next few quarters. While big banks have long seen fintech companies as potential competitors, in the last year they have begun to see them as potential enablers. Considering the big shift, corporate participation in global deals to VC-backed fintech companies accounted for 25% of investments.
The massive investment in fintech shows that the digital revolution is well advanced in financial services, and it is both a threat and an opportunity for banks. Fintech is empowering new competitors and start-ups to move into parts of the banking business and paradoxically, it is also helping banks to create better, more convenient products and services for their clients. It is also leading to increased cooperation between traditional banks and innovative start-ups and technology businesses in a way that can result in totally new business models and revenue streams