Fintech 2018 investments represent a record annual high with a total disclosed transaction value of $30.8bn.
The fintech 2018 record high is more than double the comparable total of $15bn in 2017.
Moreover, as fintech start-ups mature, the average funding round has doubled in size compared to 2017. Furthermore, the average venture round in the Asia-Pacific region is now almost double the global average.
The figures are released by technology mergers and acquisitions adviser, Hampleton Partners in its annual Fintech M&A Market Report.
But the report says that fintech M&A transactions cooled in the second half of 2018.
Fintech 2018: M&A deals cool in H218
In the first half there were a total of 189 M&A transactions worth $50bn. In the second half, Hampleton records 160 transactions worth almost $13bn.
The decrease in value is largely due to the absence of disclosed blockbuster deals akin to Blackrock’s $17bn of Thomson Reuters in 1H2018.
Other big deals in the first half of 2018 include the $5.2bn CME acquisition of NEX Group.
Trailing multiples on a 30-month median basis continued their upward movement. Revenue multiples reached 3.0x, up from 2.9x in 1H 2019, while EBITDA multiples reached 15.3x, up from 15.0x in 1H2018.
Jonathan Simnett, director and fintech specialist at Hampleton Partners, says: “In the latter half of 2018, the UK continued to lead the way in fintech in Europe. The UK is breeding a new generation of innovators. There are record levels of investment following the lead of new unicorns like Monzo and Revolut.
“Retail banking has led the charge in upgrading digital consumer experiences. It is incorporating fintech into core banking products. Investment banks have been more focused on integrating robo-advisory services.”
Fintech 2018: key trends
- The adoption of biometric technologies is becoming widespread amongst consumers. Examples include smartphone fingerprint authentication and facial recognition for payments;
- AI continues to show promise as firms adopt algorithms and advanced modelling techniques for investment decisions. Change is more likely to resemble a gradual process than a quantum leap into new data sources and methods;
- Winners in fintech are primarily emerging at a regional rather than global level.
- The UK leads the way in Europe, breeding a new generation of innovators with record levels of investment. But the biggest British fintech firms are dwarfed by America’s Stripe, Robinhood and SoFi and China’s Ant Financial.
- As funding grows more selective, scrutiny of business fundamentals is on the rise
Fintech in 2019
Jonathan Simnett concludes:
“The largest fintech firms will soon realise value through IPO in 2019. Meanwhile, most start-ups that have grown large enough to gain traction, attract a strong customer base and produce a profitable balance sheet, will remain small enough to be acquired by fintech and traditional incumbents leading to an ongoing process of consolidation and M&A.”