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April 14, 2016updated 05 Sep 2016 11:27am

Investors inject $5.3bn into fintech start-ups in record Q1

News: Europe and Asia drive global fintech investment growth between January and March.

By CBR Staff Writer

Global investments in financial technology ventures continued to rise in the first quarter of 2016, mainly boosted by a surge in investments from Europe and Asia.

Global investment in fintech grew 67% to $5.3bn between January and March 2016, compared to the corresponding period a year earlier, according to a report released by Accenture.

Fintech companies in Europe and Asia-Pacific accounted for 62% of all investments in the first three months of 2016. Investments in these regions have nearly doubled in the quarter on an annual basis.

Accenture‘s group chief executive Richard Lumb said: "The drive for fintech innovation is spreading well beyond traditional tech hubs.

"New frontiers like robotics, blockchain and the Internet of Things are bound less by geography than by the industry’s ability to adopt and scale clever ideas that improve service and efficiencies."

"The so-called ‘Fourth Industrial Revolution’ is a global phenomenon that brings new innovation and digital companies that compete and collaborate with traditional financial services. Bank customers stand to gain from this."

The report finds collaborative fintech ventures taking a lead over "disruptive" players that foray into the market to compete against those institutions.

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Global investments in collaborative fintech ventures have risen steadily from 38% in 2010 to 44% in 2015. The remaining investments were made in ventures that compete with financial institutions.

However, investments in the two categories displayed a divergence for North America and Europe regions.

While North America witnessed a sharp increase in investments in collaborative ventures over the past six years, Europe saw a dramatic rise in funding for "disruptive" ventures.

Funding for collaborative fintech ventures in North America rose to 60% in 2015 from 40% in 2015. In contrast, Europe saw investments in "disruptive" ventures climbing to 86% in 2015 compared to 62% in 2010.

Accenture’s Financial Services group managing director said: "The proportion of competitive fintech ventures in Europe and Asia is much higher than in North America, which largely reflects the earlier stages of maturity of fintech markets, particularly outside of London.

"London’s welcoming regulatory environment has made a preferred market for competitive fintech ventures to test their propositions. Banks too stand to benefit from this, as it drives momentum to re-imagine their own capabilities."

Overall, global fintech investment increased by 75% to $22.3bn in 2015, even as the US fintech sector recorded a moderate growth in new funding.

But a rapid growth in fintech sector in China, India, Germany and Ireland has significantly contributed to the growth in fintech funding. Investments in China’s fintech sector saw a massive growth of 445% to $2bn last year. In Asia-Pacific, fintech investment more than quadrupled in 2015 to $4.3bn.

The report noted the "disruptors" that compete with banks in the initial stages often end up aligning with them through investments, acquisitions and alliances.

"Banks that excel in assessment and adoption of external fintech disruptions, be they collaborative or competitive, can leapfrog the competition by providing the kinds of digital innovations that consumers have grown to expect from retail and technology giants," Skan added.

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