The fintech sector catalyzed $135.7 billion of investments in 2019 spread over 2,693 M&A, private equity and venture capital deals, both down from $141 billion and 3,145 deals in 2018 and after a very slow start to the year. However, the figures still represent the highest levels recorded in the last six years. This data is revealed by the periodic report of KPMG, The Pulse of Fintech.
Discover the most important business headlines in the fintech sector and stay up to date with everything happening in the financial world, with the Born2Invest mobile app.
2020 likely to be a great year for the fintech sector
As for the future, in light of the important changes on the horizon, such as the growing focus on open banking, regulatory evolution in several countries and the development of technologies such as artificial intelligence and blockchain, 2020 promises to be another great year for the fintech sector.
The COVID-19 crisis should not have negative effects, on the contrary. Rather, the feeling is that fintech, the same as and more than the tech sector in general, will be favored. In particular, the payment business, including digital banking, will focus on mature startups working to expand geographically or to increase the breadth of the product range on offer.
An example of how the trend will be can be found in the recent $13 million deal conducted by the renowned venture capital Lake Star on Yapily, a fintech startup in London. The round was also attended by European venture capital funds HV Holtzbrinck Ventures and LocalGlobe, already investors. Yapily offers service providers an easy way to retrieve financial data and make payments securely, by connecting directly to all open banking APIs of retail banks, as required by the second EU Directive on electronic payments (PSD2).
The Directive requires banks to allow certified third parties to access the accounts of their customers who have requested it in order to execute payment transactions or query account balances and movements via so-called APIs (Application Programming Interfaces), i.e. computer interfaces that allow the development of applications and services using data made available by the technological infrastructure of a third-party financial institution.
In 2019, the fintech sector saw a few great deals
Returning to the 2019 fintech figures, the more mature fintech companies have attracted more funding and there has, therefore, been an increase in the average size of operations. In particular, according to KPMG’s calculations, two transactions have led the market over the past year: the acquisition of Worldpay by Fidelity National Information Services (FIS) for $42.5 billion; the acquisition of First Data by Fiserv for $22 billion; and the acquisition of Dun & Bradstreet for $6.9 billion by CC Capital, Cannae Holdings, Thomas H. Lee Partners and Black Knight; the acquisition of French eFront by BlackRock for $1.3 billion; and the acquisition of Italian Sia, a group specializing in payment infrastructure, by Cdp Equity and FSIA Investimenti, which ranks tenth in KPMG’s ranking of the year’s major transactions with an equivalent value of approximately $895 million.
However, this is not the end of the story: given the crisis caused by the spread of COVID-19, the hypothesis of a merger between Sia and Italian pay tech Nexi is taking hold at the expense of Sia’s hypothesis of a mortgage.
On the venture capital operations front, deals in 2019 totalled a drop to $35.2 billion from $45.1 billion in 2018, while private equity investments were only 80 for a total of $3.1 billion, compared to 114 deals and $5.1 billion in 2018. The real boom, in fact, was mainly in M&A activity, with as much as $66.8 billion of deals in the third quarter alone.
Looking at the individual geographic areas, America and Europe set new records for investment in the fintech sector, while Asia showed a slight decline after the peak observed in 2018. In the Americas, transactions worth $64.2 billion were concluded, while in Europe, $58.1 billion were concluded, the majority of which was attributable to the individual Worldpay transaction ($42.5 billion).
The number of Italian fintech companies increased
As far as Italy is concerned, according to BeBeez’s database, in these first three and a half months of 2020, fintech startups and scaleups have already cashed in rounds totaling $120 million (€110 million), after venture capital investments increased to $285 million (€261 million) in 2019 from around $218 million (€200 million) in 2018. In total, they have collected $438 million (€401 million) from investors since the beginning of their activity, compared to $301 million (€276 million) collected since the beginning of their activity from startups and scaleups that announced rounds in 2018.
As for the outlook for 2020, according to PwC, on the one hand, the coronavirus could accentuate the trend of less attention to new start-ups (round seed) by venture capital funds. On the other hand, the coronavirus is also highlighting the Italian delay in digitization, including in the financial sector.
This situation could lead to a significant increase in the use and appreciation of digital financial services by all customers, as well as the probable exponential growth in demand for credit (especially for SMEs), which is increasingly finding an answer in the world of fintech, due to the shorter disbursement times compared to traditional financing.
According to PwC, there will be a consolidation of the sector in some areas (lending, customer experience, onboarding and KYC solutions, cybersecurity, Artificial Intelligence and advanced analytics solutions, conversational interfaces, blockchain), and service integration platforms capable of involving more operators, both traditional and non-traditional, will become increasingly important.
Roberto Lorini, FinTech Leader of PwC Italia commented: “Never before, the contribution of FinTech companies in terms of accelerating digital innovation to traditional financial companies, can become a strategic element for an innovation aimed at responding to new customer needs (private and corporate).”
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in BeBeez, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
Nextsense Collects €600,000 from Ulixes Capital Partners and €1.5M through Azimut Direct
The investment in Biovitae represents the 16th deal completed by Ulixes Capital Partners since it began operations in July 2019...
How Competitive is the German-Speaking Fintech Industry in an International Comparison?
Although the challenging framework conditions have led to fundamental economic resilience in the German fintech sector and enabled a clear...
Why a Current Market Trend Is About to Play Itself Out
Too many investors see extremes, such as this, as a reason to give up hope; that thing will never change,...
MATIC Share Price Forecast: What Does Polygon Expect in the Current Bear Market?
Cryptocurrencies such as Bitcoin and Polygon have a close correlation with stocks. In most cases, they rise when leading indexes...
Coima sgr’s Porta Nuova Centrale Fund Secures €173.5 Million Green Financing
Coima sgr, founded and led by CEO Manfredi Catella, ended 2021 with assets under management up 6 percent to $9.74...
Biotech2 weeks ago
Satellos Bioscience’s Stem Cell Signaling Research Could Turn the Tables on Muscular Dystrophies
Cannabis2 weeks ago
Luis Figo Launches His Brand of CBD Products
Featured2 weeks ago
Stock Markets Have Officially Entered Bear Territory
Business2 weeks ago
The Influx of Federal Funds Is Spurring Rail Improvements Nationwide