European fintech investment continues to grow as global investment falls

Financial technology (fintech) sectors in Germany, the UK, Sweden and France recorded huge growth in investment in the first six months of this year, while total global funds received fell due to a distortion caused by a large deal in the same period last year.

In the UK, investment in fintech firms in the first half of 2019 almost doubled to $2.6bn, compared with the same period in 2018. A similar increase was seen in Germany, where investment also doubled to reach $812m. Sweden had the highest proportional increase in Europe, with investment quadrupling to total $573m. In France, meanwhile, investment increased by 48% to reach $423m.

This is according to analysis by Accenture, which put the total value of fintech deals globally in the six months to the end of June at $22bn, down from $31.2bn in the same period of 2018. The 29% drop was largely due to figures for the first half of 2018 including the Ant Financial $14bn funding. Stripping that deal out of the total for the first six months of 2018 would put investments at 28% higher in the first half of this year.

The first half of the year saw contrasting fortunes in the two biggest markets. The value of deals in the US increased by 60% to $12.7bn, while investment in China ground to a halt, according to Accenture.
 
In the UK, challenger banks stood out, with Monzo, a mobile-only challenger bank which received its banking licence in April 2017, raising $144m during the period, while $211m was invested in Starling Bank. Meanwhile, money-transfer startup TransferWise received $292m in May and WorldRemit raised $175m 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,” he said.

But Skan added that there are questions about how long can that last? “Fundraising is likely to reach a plateau soon, and will most likely dip going forward.”