Accenture global analysis: UK fintech investment almost doubles

According to global professional services company Accenture, fintech investment in the UK nearly doubled to approximately $2.6 billion in the first half of 2019.

The overall number of deals rose by a quarter to 263 as challenger banks and payments companies continued to draw investors’ interest; for example, Monzo raised $144 million in June.

“There’s been a lot of interest and demand from consumers for new fintech propositions, particularly in the UK and elsewhere in Europe, which helps explain the big jump in investments there,” said Julian Skan, a senior managing director in Accenture’s Financial Services practice. 

“Fundraising is also moving to support the scaling up of challenger and collaborative fintech, which will cause lumpiness in some rounds as we get to the business end of the investment cycle where investors look for returns based on a sustainable bottom line, rather than another buyer. 

“However, the question is: How long can that last? Fundraising is likely to reach a plateau soon and will most likely dip going forward.”

The report concluded global investment in fintech ventures was cut “sharply” in the first half of 2019.

Developed using analysis of data from CB Insights, a global venture-finance data and analytics firm, it referred to the fundraising and deal activity in China that occurred the previous year had halted, partially offsetting strong gains in the US, UK and other European countries.

In total, financial tech agreements globally in the last six months (concluded June 30) reached $22 billion – a decline of 29% in comparison with $31.2 billion in the same period of 2018.

Accenture pins the drop due to a “lack of a giant deal” such as Ant Financial’s record $14 billion fundraising in May 2018. Not incorporating that specific deal, global fintech investments would have climbed 28% in the first half of 2019.

In the US, the value of deals increased by 60% to $12.7 billion despite the number of transactions remaining almost unchanged from the first half of 2018 (564 vs. 563).

The largest part of funding (29%) went to lending startups, followed by those in payments, with 25% of the total.

Other European markets also made significant improvements with investments in German fintechs more than doubling in the first half of 2019, to $829 million from $406 million in the same period last year. 

Fundraising in Sweden more than quadrupled, to $573 million, while fintechs in France raised $423 million in the first half of 2019, 48% more than a year earlier.

There were also large fundraising gains in Asia Pacific, with the value of deals in Singapore nearly quadrupling, to $453 million, and the value of deals in Australia more than tripling, to $401 million.

“Increased activity in many markets is a good indicator of the level of confidence many investors have in the fintech industry,” explained Piyush Singh, a managing director at Accenture who leads its Financial Services practice in Asia-Pacific and Africa. 

“Startups and the solutions they offer are maturing, which bodes well for traditional institutions partnering with fintechs and for innovation in the financial services industry as a whole.”