Fintech investment between the UK and rest of Europe hits two-year high

Despite Brexit, investment between the UK and rest of Europe in financial technology companies surged to a two-year high in the first three months of 2017.

 

Friday 5

That is according to a report by KPMG, which reveals that the continent provided $212m (£164m) in venture capital (VC) funding to UK Fintechs, the highest sum since the third quarter of 2015.

 

Conversely, investment from Britain in startups on the continent hit $428m – by far the largest amount since 2014 – despite an overall Fintech investment slowdown in the first quarter globally.

 

“It’s clear that any uncertainty around the impact of Brexit seen in 2016 has, for now at least, dissipated,” KPMG tech growth practice co-head Patrick Imbach, said. “It’s especially promising to see such a healthy level of mutual interest between the UK and Europe in light of the hectic political agendas on both sides of the channel.”

 

Despite this, the report shows that the UK continues to be the dominant Fintech force in Europe, accounting for half of the top ten investments, and attracting $212m in VC funding in the first quarter of this year, up 28% from the $178 recorded in the previous three months.

 

“Global investors may see value here given the depreciation of the pound, or they may simply be reassured by the level of innovation and regulatory support for start-ups happening in the UK. Regardless of the cause, the start of 2017 holds promise for UK fintech,” Imbach added.

 

It was also found that UK Fintechs appear to be firmly on the US’ radar, which was reflected in Google Venture’s first investment in the European Fintech market, financing London-based Currency Cloud to the tune of $25m.

 

The start of 2017 also saw a number of significant fundraises for challenger banks, including an $103m round by Atom Bank and $28m raised by Monzo, continuing an 18-month trend that has seen the UK give rise to more challenger banks when compared to most other regions.

 

“The regulator and the government in the UK are doing a lot of work to ensure the UK’s banking scene is a competitive one and technology plays a crucial role in that,” KPMG UK’s head of challenger banking, Richard Iferenta, said.

 

“As we enter the new world of open banking and PSD2, there will be huge demand for innovative banking solutions, so I have no doubt that those UK growth banks able to demonstrate value will remain attractive to global investors.”