Investment in financial technology ventures increased by 18% to hit a record high of $27.4bn (£19.9bn) in 2017, according to research by consultancy firm Accenture.
This was mostly thanks to a sharp increase in investments across the US, UK and India, while the number of deals worldwide rose significantly from 1,800 in 2016 to 2,700.
Deal value jumped by around a third in the US, nearly quadrupled in the UK, and increase almost fivefold in India, underscoring the continued appetite for innovation in insurance banking and capital market startups.
“Much of the growth, particularly in the U.S. and UK, has been driven by big new investment flows from China, Russia, the Middle East and other emerging economies,” Accenture senior managing director, Julian Skan, said.
“Also fuelling growth was the rapid rise of InsurTech ventures where traditional carriers see new opportunities. India’s boom was driven by strong demand for cashless services following the country’s demonetisation events.”
The research involved analysis of financial technology investment data from CB Insights, finding that total funding between 2010 and 2017 reached $97.7bn, with US startups accounting for 54%.
The number of FinTech deals during that time grew at an annual rate of 35%, while total investment increased by 47% per year.
Although FinTech investment appears increasingly attractive, the level of funding in China declined by 72% to $2.8bn in 2017 after a series of mega-deals the previous year.
The average deal size in the county in 2017 was $19m, down from $186m in 2016, although China still experienced a number of large transactions.
Global investment in startups developing payments and lending took the bulk of funds in 2017, accounting for about 30% each of the total, while those offering insurance-related services garnered 12% of funds.
“This investment reflects the soaring demand within financial services for new digital innovations, as these technologies prove their value and applicability in the market,” Accenture Financial Services group chief executive, Richard Lumb, said.
“That will continue to position FinTechs for a vital role in helping reshape the financial services landscape.
“For markets like the UK, where slower economic growth and industry uncertainties due to Brexit have been an issue, it is an encouraging sign.”
InsurTech is expected to help generate over $400bn (£312bn) worth of premiums worldwide by 2023, more than double the estimated $187bn today.
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