KPMG recently published its "Pulse of Fintech" report on global investment in fintech for H2 2018. Here's what you need to know:

  • Global investment in fintech companies hit $111.8B in 2018 (with 2,196 deals), more than doubling global fintech investment in 2017. This was partly due to a small number of mega deals.
  • In the Americas, 2018 fintech investment hit $54.5B across 1,245 deals.
    • At $52.5B (up from $24B in 2017), investment in United States fintech companies made up the vast majority, mainly driven by a strong number of $100M plus mega deals.
    • Canada's fintech market remained steady in 2018, but appears to be poised for growth in light of the changes to the Bank Act that are expected in 2019 and initiatives undertaken by the Canadian governments (including its payments modernization initiative and its consideration of a shift to open banking). Moreover, given Canada's role as a global leader in artificial intelligence (AI) and machine learning, KPMG expects increasing investor interest related to AI-driven fintech offerings in Canada over time.
    • Investment in Latin America (particularly Brazil) continues to see strong growth, in part due to increasing global investment (including from investors in the US and Canada).
  • In Europe, investment in fintech companies reached $34.2B (536 deals), more than tripling 2017 investment, with the United Kingdom remaining the leader despite Brexit concerns.
  • Asia achieved a new high for fintech funding in 2018, with 372 deals raising a total of $22.7B. While China remained the leader, deals in countries such as India, Australia and the Philippines counted among the top 10.

KPMG's predictions for 2019 include:

  • Increasing levels of consolidation, particularly in the payments and lending spaces, but also in emerging areas such as blockchain.
  • Bigger deals due to investors' increasing focus on later-stage fintechs.
  • An increase in open banking, fueled by favourable regulations in Canada, Europe and elsewhere.
  • A dramatic increase in investment in blockchain companies dedicated to building specific products and services.
  • Investments in regtech will rise, as startups strive to help incumbent financial institutions reduce costs associated with complying with stringent regulations.

The author would like to thank Scott Thorner, articling student, for his assistance in preparing this legal update.

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