The Pulse
of Fintech
2018
Biannual global analysis of
investment in fintech
31 July 2018
2
#fintechpulse
Welcome to the latest edition of the Pulse of Fintech a biannual
report highlighting key activities and trends within the fintech market
globally and in key regions around the world.
The year 2018 started with a bang for the fintech market, with overall
investment across venture capital (VC), private equity (PE) and mergers
and acquisitions (M&A) deals at mid-year already well above 2017's
total investment results. The sharp increase in activity was driven in part
by two massive deals: the record-setting $14 billion raise by Ant
Financial during Q2'18 and Vantiv's acquisition of WorldPay in Q1'18
for $12.9 billion.
Notwithstanding the two outlier deals, fintech market activity worldwide
gained momentum during the first half of the year as the geographic
diversity and reach of fintech investment continued to expand. Brazil,
for example, gained some prominence earlier this year as Nubank
joined the fintech unicorn club. France, Switzerland, South Korea and
Japan also saw significant fintech deals extending investment well
beyond traditional fintech leaders like the US, UK, China and India.
In the more mature fintech areas of payments and lending, dominant
market players continued to emerge over the first 6 months of 2018,
attracting larger and larger deal sizes. Meanwhile, a broader range of
companies focused on newer areas of fintech innovation, such as
artificial intelligence (AI) and data analytics, also attracted attention from
fintech investors.
Regulatory issues have been a hot button topic for corporate and other
fintech investors so far this year, particularly in Europe, as a result of
the implementation of Payment Services Directive 2 (PSD2) and
General Data Protection Regulation (GDPR). The increasing focus on
managing regulatory requirements and compliance contributed to an
increase in funding for regtech companies. In just 6 months, VC funding
to regtech companies has already exceeded regtech funding raised
during all of 2017.
We examine these trends and other issues in this edition of the Pulse of
Fintech as well as delving into a number of questions driving interest in
the fintech market today, including:
How is the fintech market maturing and diversifying?
Why is Asia becoming a standout region in terms of fintech
investment?
What is driving the increasing focus on regtech?
How is open banking propelling fintech activity globally?
We hope you find this edition of the Pulse of Fintech insightful and
informative. If you would like to discuss any of the information contained
in this report in more detail, contact a KPMG advisor in your area.
Welcome
message
Ian Pollari
Global Co-Leader of Fintech,
KPMG International and
Partner,
KPMG Australia
Anton Ruddenklau
Global Co-Leader of Fintech,
KPMG International and
Partner,
KPMG in the UK
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Tax and Advisory services. We
operate in 154 countries and
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people working in member
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independent member firms of the
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("KPMG International"), a Swiss
entity. Each KPMG firm is a
legally distinct and separate entity
and describes itself as such.
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by
PitchBook unless otherwise specified.
3
#fintechpulse
Contents
15
Global
Americas
In H1'18 global investment in fintech companies hit $57.9 across 875 deals
Global investment YTD (VC, PE and M&A) already exceeds last year's annual total
Overall VC deal volume remained steady once again, with continued strength at all deal
stages
Global median venture deal size for late stage investment rose from $14 million in 2017 to
$25 million in 2018 (YTD)
Regtech investment reached $1.37 billion in H1'18 already surpassing 2017 annual totals
In H1'18 fintech investment in the Americas reached $14.8 billion across 504 deals
96% of deal value in the Americas came from the US
Fintech VC deal volume reached new heights during the first half of the year
Canadian deal value dropped versus H2'17 but deal volume remained strong
23
31
42
US
Europe
Asia
In H1'18, US fintech companies received $14.2 billion in investment, including over
$5 billion in venture capital investment
Deal value and volume rebounded in H1'18
Investors were quick to invest in new startups in emerging fintech sub-segments,
including regtech and investment banking
Top deals were spread across the country with California and Massachusetts
leading the way
In H1'18 investment in fintech companies in Europe hit $26 billion across 198 deals
Huge acquisitions of WorldPay and iZettle and buyouts of Nets and IRIS Software
led the way
Median venture capital angel/seed stage deal size increased from $1.2 million in
2017 to $1.5 million in 2018 (YTD)
Median M&A size in Europe increased from $23.7 million in 2017 to $60.4 million in
2018 (YTD)
The UK led the charge with over $16 billion in total fintech investment
In H1'18 investment in fintech companies in Asia hit $16.8 billion across 162 deals
Ant Financial's massive $14 billion round was a massive outlier
Fintech M&A rebounded during Q2'18 with $611 million invested
Fintech VC deal volume in India rose to 31 deals in Q2'18 a new high
China and India dominated the top 10 deals with six and four massive deals, respectively
4
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by
PitchBook unless otherwise specified.
In H1'18, global
investment in fintech
companies hit
$57.9B
across
875 deals
5
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
In the first 6 months of 2018, global investment in fintech across VC, PE and M&A was exceptional, driven in part
by two massive deals the $12.9 billion acquisition of WorldPay by Vantiv and the $14 billion VC funding round
raised by Ant Financial. Funding to date has already exceeded the total amount of fintech funding seen in 2017 and is
well on pace to exceed 2015's peak.
Maturing areas of fintech seeing bigger deals and strong exits
Fintech as a sector continued to evolve in the first half of 2018. In the more mature areas of fintech, dominant market
players were able to attract larger investment rounds, including challenger banks Revolut ($250 million) in the UK and
N26 ($160 million) in Germany and peer-to-peer (P2P) payments firm Circle in the US ($110 million).
A number of highly mature payments firms also achieved strong exits in Q1 and Q2'18, including successful IPO exits
by EVO payments, GreenSky and Adyen and M&A exits by WorldPay and iZettle.
Fintech innovation diversifies expanding beyond traditional verticals and hubs
During Q1 and Q2'18, investors focused on a broader range of innovative technologies than ever before. At a
technology level, interest in AI and robotic process automation (RPA) continued to gain attention while interest in
insurtech and regtech also grew significantly. Globally, there has also be an increasing emphasis on business-to-
business (B2B) fintech solutions as evidenced by the $250 million raise by Tradeshift.
In addition to expanding vertically, fintech investments expanded geographically across all regions of the world. With a
$150 million raise in Q1'18, Brazil-based Nubank which reached unicorn status while companies from five separate
countries in Europe were among the region's top venture deals (e.g. UK, Germany, France, Netherlands,
Switzerland). While the Asia fintech market continued to be dominated by China and India, Japan was able to break
into the region's top venture deals list with a $63 million Series A raise by Folio.
Corporate investors expand beyond the big banks
The growing maturity of the fintech sector has led to an increase in the diversity of investors, including more active
participation by corporates outside of the big banks and largest insurance companies. Globally, we are starting to see
more mid-tier banks in addition to insurance and wealth management companies have recognized the need to
embrace fintech and are making investments either directly or through participation in accelerators, incubators or
innovation consortia.
New regulations becoming a driving force for fintech investment
Q1 and Q2'18 saw a number of transformative regulations come into force, including both PSD2 and GDPR in
Europe. While Europe has been a leader in driving open banking, other countries are moving down similar paths
including Australia, which is commencing implementation of their open banking regime in mid 20191.
These changes to the financial services landscape are expected to drive additional fintech investment. Open banking
in particular is expected to spawn a wide range of activity both from traditional institutions looking to partner with
fintechs able to process and leverage their data and from fintechs able to use open banking to extend their value
propositions. Over time, we may also see increasing participation from non-financial services companies, such as
communications companies, energy providers and retailers interested in leveraging open banking as a means to
extend their reach into financial services.
Overall investment in fintech globally at mid-year
surpasses 2017 results
1 https://www.zdnet.com/article/australia-to-force-big-four-to-open-banking-data-by-july-2019/
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#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Regtech gaining momentum globally
Over the past 10 years, financial institutions have faced an ever-increasing regulatory burden. The cost of compliance
has skyrocketed for many financial institutions, particularly global institutions needing to comply with regulatory
requirements across jurisdictions. The growing cost of compliance has driven many corporates to invest in regtech.
The introduction of financial regulations including GDPR, PSD2 and Markets in Financial Instruments Directive
II/Markets in Financial Instruments Regulation (MiFID II/MIFIR) have only accelerated this investment over the past
6 months.
So far, 2018 year-to-date funding has already exceeded total annual regtech funding in every year previous except
2016. The US and UK attracted the majority of this funding. At a technology level, regtech investments have been
quite varied from a $25 million raise by UK-based CloudPay a payments processing platform compliant with
specific regulations, to $38 million raised across two funding rounds by US-based Harbor a blockchain-based
compliance platform that tokenizes private securities for trading.
Regtech investment is still relatively immature, with approximately half of total funding raised by seed and early stage
companies. In the most mature markets, there have also been a small number of mid-stage investments this year,
including Series C raises by CloudPay and Tipalti.
Over the next 12 to 24 months, we expect to see investment in regtech to grow rapidly particularly in areas like AI,
Know your Customer (KYC) and Know your Data (KYD).
Blockchain moving beyond experimentation
Blockchain continued to draw a significant amount of attention from investors in Q1 and Q2'18, although investments
typically focused on more experienced companies and consortia looking to obtain additional rounds of funding rather
than on new market entrants.
Investor interest in blockchain was not limited to one jurisdiction. Good sized funding rounds were seen during the
first half of the year, including $100 million+ rounds to R3 and Circle Internet Finance in the US and $77 million to
Ledger in France. The US was particularly active on the blockchain front, with total investment in the first half of the
year already exceeding the total seen in 2017.
Over the past 6 months, banking consortia R3 expanded its mandate to include insurance companies while the key
insurance consortia B3i has been working to establish a new business in order to commercialize its outputs. New
consortia have also continued to crop up, particularly consortia focused on developing blockchain to assist with
supply chain management.
ICOs continued to garner interest globally, despite countries like China banning the practice. During Q1'18, Cayman
Islands-based Block.one raised $4 billion through an ICO.
Overall investment in fintech globally at mid-year
surpasses 2017 results (cont'd)
7
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Interest in insurtech rises, with growing focus on embedded offerings
Over the past 6 months, insurtech companies attracted a significant amount of investment, including $100 million+
megarounds to Oscar and Lemonade.
During the first half of the year, we started to see Insurance companies and insurtechs increased their focus on
forging cross-sector alliances in order to embed their offerings into other value propositions. For example, ING and
AXA recently forged an alliance aimed at connecting AXA's insurance customers into ING's value chain in order to
create a stronger and more holistic product offering.
While insurtech is very immature in Asia, we have started to see a number of fintechs and techfins in the region have
started to expand their service offerings to include insurance. The broadening scope of Asia-based fintechs could help
propel interest in insurtech over the next few quarters.
We expect the use of partnerships or alliances will likely increase over the next 12 months as insurance companies
look to combine their services with companies that have already established customer bases. Such alliances could be
particularly effective as a means for insurtechs to fuel expansion into other regions of the world.
Trends to watch for globally
The global fintech market is expected to remain strong over the remainder of 2018. Leading players in payments and
lending will continue to emerge in the most mature markets, focusing their growth efforts on expanding the breadth of
their product and service offerings. As leading companies become more pronounced, there will also likely be some
consolidation of platforms unable to achieve scale.
Investments in insurtech and regtech are expected to grow over the next 6 months, in addition to investments in
enabling technologies like AI, RPA and blockchain. Open banking will likely continue to gain ground around the world
including Asia, where the Hong Kong (SAR) Monetary Authority recently published its open API framework.
There is also expected to be an increase in B2B offerings both from fintechs and from traditional corporates that have
developed successful digital products and see offering them to other financial institutions as an opportunity to create a
new revenue stream.
Overall investment in fintech globally at mid-year
surpasses 2017 results (cont'd)
"The fintech market globally continues to broaden and diversify. Geographically, we are seeing more
activity and bigger deals in less traditional markets like Brazil, Japan, and South Korea. We are also seeing
a mix of fintech sectors drawing increasing interest, including data, AI, regtech and insurtech and
combinations thereof that provide more value to customers. This diversification across countries and
products will likely keep the fintech market strong for the foreseeable future."
Ian Pollari
Global Co-Leader of Fintech
KPMG International
8
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Note: Refer to the Methodology section on page 56 to understand any possible data discrepancies between this edition and previous editions of the Pulse of
Fintech. Please note that the separate PE and M&A data sets both include PE buyouts as a transaction type per the Methodology section on page 56.
The first half of 2018 has trumped all prior quarters in terms of aggregate deal value. Much of the tallies are
skewed by outlier transactions such as Ant Financial's massive late-stage $14 billion deal and the $12.86 billion
acquisition of WorldPay. However, the totals suggest the intensifying consolidation among some fintech sub-
segments and investors' avid interest.
Global investment activity (VC, PE and M&A) in fintech companies
2012 30 June 2018
A record half-year
$1.2$3.0$3.1$1.6$1.7$3.1$7.4$2.9$8.6$11.9$8.7$14.0$15.4$6.6$15.5$25.0$8.1$14.0$6.0$14.2$4.3$11.8$9.6$12.4$26.1$31.70
50
100
150
200
250
300
350
400
450
500
$0
$5
$10
$15
$20
$25
$30
$35
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
"We continue to see technology giants around the world explore, collaborate and invest in fintech-related
opportunities. In the US, we see the likes of Amazon, Microsoft and Google in an arms race of sorts they
all have hired senior leaders to drive expansion in this space and are actively recruiting fintechs onto their
cloud platforms."
Anton Ruddenklau
Global Co-Leader of Fintech
KPMG International
9
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Global VC activity in fintech
2010 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Intriguingly, the trends for overall VC activity in fintech differ substantially from those seen across the venture
landscape on the whole. By and large, angel and seed financing volumes have steadily declined for some
time across the industry, while within fintech, such activity has only trended up and stayed steady for some
time, albeit with some volatility. Late-stage VC has only trended upward slowly and stayed strong on the
other hand. Fintech's popularity among VCs at all stages speaks to its core attributes: well-defined market
opportunities in its major segments, long-developing innovation cycles and significant growth opportunities
amid the best-developed segments.
Strong volume across all stages differs from
overall venture trends
0
50
100
150
200
250
300
350
400
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital Invested ($B)
# of Deals Closed
Angel/Seed
Early VC
Later VC
itl invest
($ )
# of deals closed
l/s
10
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Global M&A activity in fintech
2012 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
M&A volume has remained robust over the past four quarters. Based on our experience, this is mostly
due to consolidation in key segments. As can be seen in the list of top transactions, some of the largest
M&A events in the first half of 2018 have been either driven by private equity shops engaging in
buyouts of incumbent, legacy fintech players, while others such as Paypal have been shoring up their
position by buying rivals in other regions.
Consolidation proceeds apace
$0.5$2.5$2.4$1.0$1.2$2.5$6.3$2.0$6.7$9.9$7.3$11.6$13.1$2.7$7.5$22.7$3.9$6.6$2.0$11.4$1.4$7.0$6.1$8.6$22.0$12.70
20
40
60
80
100
120
140
$0
$5
$10
$15
$20
$25
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
11
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Global median venture financing size ($M) by stage in fintech
2010 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Global median M&A ($M) size
2010 30 June 2018
Median financing size hits new record
$0.6
$0.6
$0.5
$0.6
$0.6
$1.0
$1.0
$1.3
$1.7
$2.5
$3.3
$2.5
$3.0
$4.1
$4.8
$4.9
$5.0
$9.2
$6.9
$8.5
$7.0
$8.1
$13.6
$19.4
$14.5
$14.0
$25.0
Angel/Seed
Early VC
Later Stage VC
s
t
s
$32.3
$63.1
$26.9
$22.5
$48.1
$46.6
$40.0
$45.0
$40.0
2010
2011
2012
2013
2014
2015
2016
2017
H1 2018
2010
2011
2012
2013
2014
2015
2016
2017
H1 2018
12
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Global venture activity in regtech
2010 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
In prior editions of the Pulse of Fintech, a broader base for defining regtech was used. However for this new
biannual edition, KPMG and PitchBook have introduced a narrower definition, resulting in the shifts in activity.
Yet, the trend is still clear: VCs are avidly funding regtech companies, with 2018 on pace for the most lucrative
year ever.
On pace for another highly active year
$21$55$68$113$256$163$343$206$2337
11
12
23
25
29
31
54
26
Capital invested ($M)
Deal count
"The regulatory landscape has evolved significantly in recent years, with the introduction of GDPR, PSD2
and MiFIDII/MIFIR creating more opportunity for risk, regulatory and compliance gaps to emerge. As a
result, we are seeing financial institutions increasingly turning to regtech to fill compliance gaps, save on
the costs of compliance, get ahead of requirements before deadlines and detect enterprise risk before the
regulators. This has led to an explosion in investment in regtech firms over the past couple of quarters."
Fabiano Gobbo
Global Leader, Financial Risk Management
KPMG International
2010
2011
2012
2013
2014
2015
2016
2017
H1 2018
13
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Global VC, PE and M&A activity in regtech
2010 30 June 2018
Much of regtech's overall
investment activity is still
driven by venture financings,
yet the needle-shifts in deal
value occur when M&A is
introduced. Barring the outlier
year of 2014, 2018 is already
on pace to record one of the
strongest years on record in
terms of aggregate value. As
prior editions of the Pulse of
Fintech have noted, the
incentives to either acquire or
back regtech enterprises are
numerous and compelling as
myriad regulatory webs
around multiple aspects of
finance grow ever more
complex.
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Note: This chart details overall investment (VC transactions, plus general M&A activity, which includes PE buyouts) in regtech, and utilizes a much narrower
definition of regtech than in prior editions of the Pulse of Fintech. Please note that the separate PE and M&A data sets both include PE buyouts as a
transaction type per the Methodology section on page 56.
On pace to be one of the strongest years ever
$25$845$281$113$3,706$869$1,159$1,019$1,37213
18
20
31
32
44
47
81
36
Deal value ($M)
# of closed deals
2010
2011
2012
2013
2014
2015
2016
2017
H1
2018
14
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Top 10 global fintech VC, PE and M&A deals in H1'18
10
7
6
3
8
5
4
9
2
1
Ant Financial $14B, Hangzhou, China
Institutional/B2B
Series C
WorldPay $12.9B, London, UK
Payments/transactions
M&A
Nets $5.5B, Ballerup, Denmark
Payments/transactions
Buyout
Blackhawk Network Holdings $3.5B,
Pleasanton, CA
Payments/transactions
Buyout
iZettle $2.2B, Stockholm, Sweden
Payments/transactions
M&A
7
8
6
9
10
5
4
3
2
1
IRIS Software Group $1.8B, Datchet, UK
Institutional/B2B
Buyout
PowerPlan $1.1B, Atlanta, GA
Institutional/B2B
M&A
Cayan $1.05B, Boston, MA
Payments/transactions
M&A
OpenLink Financial $1B, Uniondale, NY
Investment banking/capital markets
Buyout
Nordax Group $788M, Stockholm,
Sweden
Institutional/B2B
Buyout
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Data as of 30 June 2018.
In H1'18, fintech
investment in the
Americas hit
$14.8B
across
504 deals
16
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
The Americas saw a strong start to 2018, with overall fintech investment well on track to exceed 2017's totals. VC
investment was particularly strong, reaching a new quarterly record of almost $3.3 billion during Q2'18. Overall M&A
and VC deals volume in the Americas also achieved new peak highs in both Q1'18 (250 deals) and Q2'18 (254 deals).
US-based fintech investment drives America's totals
US companies drew $14.2 billion in overall fintech investment during the first 6 months of 2018, accounting for the
vast majority of fintech investment in the Americas. Large fintech deals in the US during Q1 and Q2'18 crossed a
wide-range of subsectors from blockchain (R3, Circle Internet) and cryptocurrencies (Basis) to insurtech
(Lemonade, Oscar) and wealth management (Robinhood).
While the US accounted for the vast majority of fintech investment in the region, other countries were quite active in
the fintech space compared to historical norms. Brazil-based Nubank, for example, held the fourth largest VC round in
the region during the first half of the year with a $150 million Series E raise.
Please see US section on page 23 for more information on US activity.
Fintech market in Canada growing, particularly around AI
The fintech market in Canada continued to evolve in the first half of 2018. In the first half of the year, Canada saw
$263 million invested in fintech deals across VC and M&A, including a $65 million raise by Wealthsimple. This is a
solid number, although off the pace seen in the second half of 2017, when $510 million was invested.
A number of the larger financial institutions in Canada have recognized the need to invest in fintech and have made
significant inroads in terms of both making investments and in developing partnerships to help move innovation forward.
AI continued to be one of the dominant focus areas for investors in Canadian fintech. Canada is seen as a global leader in
AI innovation with highly regarded specialists in Toronto, Montreal and Edmonton attracting significant investments to
those cities. We continue to see banks acquire companies in the AI space, in part as a talent grab in order to fuel their own
innovation activities. For example, in January 2018, TD Bank Group acquired AI predictive analytics firm Layer 62.
In Canada we continue to see the big banks invest in robo-advisory initiatives, either their own or by working with
fintechs like Wealthsimple. Blockchain has also grown on the investment radar in Canada, with a number of large
financial institutions participating in blockchain consortia. The Canadian government has also invested in payments
related proof-of-concept activities, although it has made a conscious decision not to use blockchain as part of its
payments modernization initiative.
VC investors and fintechs preparing for payments modernization in Canada
The Canadian government is in the process of updating its Bank Act3, which is expected to occur in 2019. The new
legislation is expected to mandate some level of "open banking" similar to what has been recently implemented in the
UK, Europe (PSD2) and Australia. Payments Canada is also undertaking a multi-year payments modernization
initiative aimed at upgrading critical infrastructure, creating a real-time payments rail and providing greater access to
the clearing system4. While both initiatives are currently in process, VC investors and fintechs recognize that change
is coming and are jockeying to position themselves to take advantage of changes once they are implemented. US-
based, infrastructure-focused, fintech Plaid, for example, recently expanded into the Canadian market5.
2 https://www.theglobeandmail.com/report-on-business/td-acquires-toronto-based-ai-startup-layer-6/article37537469/
3 https://cba.ca/canada-bank-act-review
4 https://www.payments.ca/sites/default/files/vision-canadian-payments-ecosystem-reader.pdf
5 http://fortune.com/2018/05/22/fintech-plaid-goldman-sachs-cryptocurrency-canada/
Fintech investment in the Americas off to a
roaring start
17
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Brazil leading fintech investment in Latin America
Brazil continued to define itself as a leader in fintech in Latin America during the first half of 2018, with Nubank's
$150 million Series E deal dwarfing many of the other fintech investments in the region. While an outlier in terms of
deal size, the Nubank deal highlights the growing importance VC investors are placing on Brazil as an epicenter for
fintech innovation in Latin America.
Overall fintech investment in Brazil has grown dramatically in the past 6 months, with the $257 million invested in
Q1 and Q2'18 just shy of double the $134 million invested during all of 2017. The country is well positioned for
continued growth over the next few quarters.
VC investment in Brazil is coming from well beyond the Americas. During Q2'18, Santander InnoVentures a
$200 million VC fund managed from the UK but owned by Santander Group in Spain contributed to a $55 million
funding round in Brazil-based Creditas.
In Brazil and more broadly across Latin America, we see payments and lending platforms continue to dominate the
interest of investors likely due to the region's relative fintech immaturity compared to other regions of the world. At
the same time, other subsectors of fintech are beginning to find traction. Nubank, for example, recently launched a
facial biometrics feature to help rein in identity fraud.
Trends to watch for in the Americas
Over the remainder of 2018, we expect fintech investment to remain strong in the Americas particularly in the US.
In Canada, more clarity around changes to the Bank Act will likely come before the end of the year, which could spark
additional investment. Banks in Canada are watching the new developments very carefully as there are currently
limitations on what banks can invest in. Should the limitations be lifted, there could be a wave of new corporate
investments in 2019 once changes come into force6.
While payments and lending will continue to be a key focus for investors in Latin America, from discussions with
financial institutions we are anticipate newer subsectors like regtech, insurtech, AI and blockchain will likely draw a
significant amount of attention in Canada and the US.
6 https://cba.ca/canada-bank-act-review
Fintech investment in the Americas off to a
roaring start (cont'd)
"The undeniable truth is that insurtech is becoming more and more dominant and disruptive in a
progressive way in the insurance marketplace than it has been historically. We increasingly see this in the
types of insurtech businesses getting traction, how insurtech is being applied to different businesses, and
the value chain that insurtech offerings are penetrating."
Will Pritchett
Global Lead of Insurtech
KPMG International
18
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech VC, PE and M&A activity in the Americas
2012 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Note: The separate PE and M&A data sets both include PE buyouts as a transaction type per the Methodology section on page 56.
For three quarters now, overall fintech investment volume in the Americas has been remarkably strong and the latest
quarter was even stronger than normal, just barely setting a new record. Moreover, deal value has been strong.
A brand-new quarterly peak in volume
$0.5$0.7$2.7$1.1$0.9$2.7$5.7$1.4$3.2$5.6$3.1$9.0$10.4$4.2$7.2$17.8$4.6$4.7$3.5$12.2$2.1$6.5$5.7$7.1$5.7$9.10
50
100
150
200
250
300
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
19
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Venture investment in fintech companies in the Americas
2012 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook), 9 July, 2018.
Throughout 2015 and 2016, much of fintech VC activity was choppy, yet in the past three quarters, fintech
venture volume has staged a remarkable comeback. What is again worth noting is such resilience is
exhibited at the early stage of the capital stack, which is against the overriding trend across the venture
industry in the whole. It is likely VCs are turning their attention to lesser-heeded fintech sub-segments.
Steady growth in VC activity
0
50
100
150
200
250
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
s
20
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech M&A activity in the Americas
2012 30 June 2018
As predicted in the penultimate edition of the Pulse of Fintech, the M&A cycle in fintech is hardly on a major
decline, but rather was set to experience at least a very healthy 2018 on the whole. That is primarily due to
consolidation, especially in the most developed fintech market, that of the Americas. The entrance of PE
buyout firms into the fintech fray definitely assisted as well.
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Key fintech sub-segments drive M&A
"We are starting to see insurance companies partnering more meaningfully with fintech companies not
just investing in them, but actually working with them to really test out insurtech and understand the impact
it could have on efficiencies, etc. This is happening primarily in developed markets like the UK and the US,
although it is slowly starting to occur elsewhere."
David Milligan
Global Lead, KPMG Matchi, and Associate Director
KPMG in South Africa
$0.0$0.4$2.1$0.8$0.5$2.3$4.8$0.8$2.3$4.1$2.1$7.6$8.9$1.8$4.3$16.7$2.8$3.0$1.6$10.7$0.7$4.5$3.9$5.1$3.4$5.80
10
20
30
40
50
60
70
80
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
21
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Median fintech venture financing size ($M) by stage in the Americas
2010 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
M&A skews to smaller end as VC soars
Median M&A size ($M) in the Americas
2010 30 June 2018
$0.6
$0.6
$0.5
$0.7
$0.8
$1.3
$1.0
$1.6
$2.0
$2.5
$3.5
$3.0
$4.0
$3.5
$5.2
$6.2
$6.4
$10.0
$6.6
$8.5
$7.9
$10.0
$15.9
$18.3
$18.5
$14.0
$25.9
Angel/Seed
Early VC
Later Stage VC
l/s
t
s
$34.5
$85.0
$35.0
$37.0
$117.0
$65.0
$63.0
$103.0
$23.2
2010
2011
2012
2013
2014
2015
2016
2017
H1 2018
2010
2011
2012
2013
2014
2015
2016
2017
H1 2018
22
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech VC, PE and M&A activity in Canada
2014 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Note: The separate PE and M&A data sets both include PE buyouts as a transaction type per the Methodology section on page 56.
The outlier quarter of Q2'17, which saw the massive buyout of DH Corp., still stands out across the Canadian
fintech transactional landscape, however, overall volumes have remained quite robust.
Canadian fintech remains highly active
0
5
10
15
20
25
30
35
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2014
2015
2016
2017
2018
Deal value ($B)
# of closed deals
"The Canadian fintech market continues to attract a significant amount of attention and investment. Toronto
and Montreal have evolved into strong fintech hubs, drawing investors interested in leveraging the
presence of global research leaders. Government initiatives are also expected to spark fintech growth over
the next few years with the payments modernization initiative expected to create opportunities for
fintechs in the payments space, while the new Bank Act will provide opportunities for fintechs around open
banking."
John Armstrong
National Industry Leader, Financial Services
KPMG in Canada
In H1'18, US fintech
companies received
investment of
$14.2B
across
427 deals
24
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
While M&A activity in the US fintech market was relatively quiet in the first half of 2018, VC investment in US-based
fintech companies remained very strong, with quarterly VC investment reaching a new high of over $3 billion in Q2'18.
Unlike the broader VC market, early stage fintech companies have continued to attract a solid amount of capital
with five of the top 10 deals in Q2'18 going to seed or early stage companies. At the same time, the fintechs able to
attract later-stage funding so far in 2018 likely reflect investor confidence in their ability to become US market leaders,
if they are not leaders already.
Diversity of subsectors drive ongoing US fintech investment
Fintech investment in the US was robust during both Q1 and Q2'18, in part thanks to fintech's wide-ranging scope.
Over the 6-month period, the US saw more than 10 $100 million+ megarounds in fintechs ranging from insurtechs
Oscar and Lemonade to blockchain-based consortia company R3.
In addition to insurtech and blockchain, wealth management and lending also obtained strong investor interest during
the quarter. Regtech also gained some momentum, particularly among corporate investors in the banking industry
interested in reining in their compliance costs.
Blockchain investment exceeds 2017 annual total
In the first half of 2018, blockchain investment in the US exceeded the total investment seen in 2017, led by $100
million+ funding rounds to R3 and Circle Internet Finance. A number of other significant blockchain deals also
occurred during Q1 and Q2'18, including Paxos' $65 million Series B raise aimed at helping it scale operations for
delivery of its blockchain platform.
Based on our experience, the rapid growth in blockchain investment overall can likely be attributed to a number of
factors including the widespread applicability of blockchain to help harness efficiencies within financial institutions.
Blockchain's capabilities extend from recordkeeping and the registration of transactions to documentation
management and supply chain management. While it has primarily been looked at from a banking and insurance point
of view to date, the reality is blockchain opportunities abound and could enhance processes for any number of US and
global businesses.
Regtech gains significant strength in first half of 2018
Since the 2008 financial crisis, financial institutions have faced an ever-increasing amount of regulations and
compliance obligations. The rise in compliance costs has led many traditional banks to investigate and invest in
regtech options with the hopes of being able to rein in costs and more efficiently manage regulatory reporting
requirements, such as the recently enacted IFRS9. The need to better manage compliance is even more of an
imperative for banks conducting business globally that need to comply with requirements in other jurisdictions,
including PSD2 and GDPR in Europe.
While still a very young field, the regtech sector has evolved rapidly over the past 12 to 18 months and is expected
to continue to evolve quickly for the foreseeable future. Regtech companies in the US span a strong variety of
offerings, from ComplyAdvantage a data company focused on anti-money laundering (AML) to Ayasdi a
machine learning-based company aimed at solving regulatory problems, and Continuity an automation-enabled
platform that identifies and interprets changes to federal compliance requirements.
US-based fintechs see surge in VC funding
exceeding $5 billion in H1'18
25
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Blank check companies on the rise in the US
During the first 6 months of 2018, over 20 new blank check companies were created, with more than a quarter noting
their intent to seek out fintech opportunities. The use of blank check companies suggested the increasing importance
investors are placing on fintech opportunities and the desire to raise the funds necessary to make a purchase when
the right opportunity arises.
Payments companies see strong exits
The payments and lending sectors continued to be the most mature of the fintech subsectors during the first half of
2018 in developed nations, with most investment activity centered around late-stage companies and those companies
seeking to exit. During Q1 and Q2'18, there was a significant degree of activity in the payments space with the
successful IPOs of EVO Payments and GreenSky in the US, in addition to the US-based Vantiv's $12.9 billion
acquisition of UK-based WorldPay.
It is expected that more consolidation will occur in the payments and lending spaces both in the US and globally as
dominant market players entrench their position and other companies find themselves unable to achieve scale.
Traditional banks invest in digital banking offerings
During the first half of 2018, a number of traditional US banks pressed down on the accelerator with respect to their
digital baking initiatives. For example, JP Morgan Chase announced the success of a digital bank pilot project and its
intent to roll out the digital bank option at a national level7. Citibank also announced a digital-only bank8, while
Goldman Sachs announced the expansion of its Marcus initiative to the UK9.
Interest in cryptocurrency trading rises as investors look at ways to manage volatility
US investors continued to show interest in cryptocurrencies, although there is still some consternation with respect to
enabling trading given the high volatility. New business models are starting to emerge aimed at reducing volatility,
such as by pegging the trading against a real currency, like the US dollar, to control variability. The implementation of
new business models related to the exchange of cryptocurrencies could have a positive impact on future uptake
should results be positive.
Trends to watch for in the US
Looking ahead, the future continues to look bright for the US fintech market. We anticipate blockchain, regtech and
insurtech are all expected to gain momentum, even as AI and RPA continue to drive cross sector opportunities. We
will also likely start to see a continued emphasis on partnering, with retailers and aggressive tech leaders globally
developing relationships with fintechs in order to steal a piece of the lucrative fintech value chain.
US-based fintechs see surge in VC funding
exceeding $5 billion in H1'18 (cont'd)
"There's more VC flow available than opportunities to invest a sign of tremendous growth in the space.
In particular, investments in blockchain doubled the first half of 2018 compared to 2017. Blockchain has the
potential to transform banking and if banking systems were to be rewritten today they would be based on
blockchain."
Safwan Zaheer
Director, Financial Services Digital & US Fintech Lead
KPMG in the US
7 https://www.businessinsider.com/jpmorgan-chase-launches-digital-only-bank-2017-10
8 https://www.citigroup.com/citi/news/2018/180326b.htm
9 https://www.forbes.com/sites/greatspeculations/2017/09/13/goldmans-retail-banking-ambitions-extend-to-u-k-with-plans-to-offer-online-
deposits/#7aaa53811050
26
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Total US fintech investment activity (VC, PE and M&A) in fintech companies
2012 30 June 2018
Both value and volume rebound in H1'18
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Note: The separate PE and M&A data sets both include PE buyouts as a transaction type per the Methodology section on page 56.
"Fintech has a number of subsectors. During the past 6 months we have seen some very large
investments from Robinhood in wealth management to Oscar and Lemonade in insurtech and R3 and
Circle Internet in blockchain. The size of these deals speaks to some of the likely winners in each of these
respective sectors."
Brian Hughes
Co-Leader, KPMG Enterprise Innovative Startups Network, and Partner
KPMG in the US
$0.5$0.7$2.5$1.1$0.8$2.7$5.7$1.3$3.2$5.5$2.6$9.0$10.3$4.1$7.0$17.8$4.2$4.5$3.5$11.9$1.7$2.6$5.4$6.8$5.4$8.80
50
100
150
200
250
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
27
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Venture investment in fintech companies in the US
2010 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
When one trend, that of resurgent angel, seed and early-stage VC volumes, combines with the remarkably
strong upward bounce in VC invested in Q2'18, it is clear that investors are not only plying newly emergent
startups in lesser-heeded fintech sub-segments, such as regtech or investment banking, but also piling into
large financings of mature, late-stage companies such as Robinhood, which raked in one of the largest deals
in the first half of 2018.
VCs back newer plays, also double down
0
20
40
60
80
100
120
140
160
180
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
l s
28
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech M&A activity in the US
2014 30 June 2018
M&A cycle rebounds to steadily high volume
After experiencing
significant swings in
volume throughout the
course of 2015, 2016 and
the first half of 2017, M&A
within the US began to
build, peaking in the final
quarter of 2017 and staying
quite resilient since. As
previously noted, both
increasingly active PE
buyout shops and
consolidation among
payments companies plus
acquisitions of innovative
startups by banks continue
to propel M&A volume
forward.
$2.3$4.1$1.8$7.6$8.9$1.8$4.1$16.7$2.5$3.0$1.6$10.5$0.4$0.9$3.6$5.1$3.4$5.80
10
20
30
40
50
60
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
29
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Median fintech venture financing size ($M) in the US
2010 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
$0.6
$0.7
$0.5
$0.7
$0.8
$1.5
$1.1
$1.6
$2.0
$1.9
$3.8
$3.0
$4.1
$3.5
$5.7
$6.3
$7.2
$10.0
$6.9
$8.5
$7.5
$10.0
$16.4
$19.4
$19.5
$15.3
$29.0
Angel/Seed
Early VC
Later Stage VC
st

l/s
Median M&A size ($M) in the US
2010 30 June 2018
$44
$88
$40
$110
$129
$100
$64
$106
$49
M&A skews toward SMEs, late-stage VC nearly
doubles as VCs pay up for exposure to growth
2010
2011
2012
2013
2014
2015
2016
2017
H1 2018
2010
2011
2012
2013
2014
2015
2016
2017
H1 2018
30
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
10
7
6
3
8
4
5
1
2
9
Blackhawk Network Holdings $3.5B,
Pleasanton, CA
Payments/transactions
Buyout
PowerPlan $1.1B, Atlanta, GA
Institutional/B2B
M&A
Cayan $1.05B, Boston, MA
Payments/transactions
M&A
OpenLink Financial $1B, Uniondale,
NY
Investment banking/capital markets
Buyout
Kensho $550M, Cambridge, MA
Institutional/B2B
M&A
7
8
6
9
10
5
4
3
2
1
BondPoint $400M, Jersey City, NJ
Investment banking/capital markets
M&A
Poloniex $400M, Boston, MA
Cryptocurrency
M&A
J.G. Wentworth $382M, Radnor, PA
Consumer finance
Buyout
Robinhood $363M, Palo Alto, CA
Personal finance
Series D
Tradeshift $250M, San Francisco, CA
Institutional/B2B
Series E
Top 10 US fintech VC, PE and M&A deals in H1'18
In H1'18, investment in
fintech companies in
Europe hit
$26B
across
198 deals
32
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Overall fintech investment in Europe saw a big boost in the first half of 2018, driven by massive M&A deals, including
the $12.8 billion acquisition of WorldPay by Vantiv and the $2.2 billion purchase of iZettle by PayPal.
On the VC front, fintech investment was more modest in Europe compared to Asia and the Americas but remained
relatively strong during both Q1 and Q2'18 compared to previous quarters. VC investors focused significantly on more
mature companies with a lot of efforts going to support Series B and Series C stage deals. For earlier stage deals,
VC investors were more cautious, although they continued to show a willingness to invest in fintechs with the right
skills, technology and intellectual property at their fingertips.
Banking corporates in Europe increasing focus on developing VC funds
Over the past 12 months, there has been a significant increase in the emergence of new corporate VC funds in
Europe, with a number of banks setting up funds in order to make fintech investments. VC fundraising activities have
occurred across Europe, from Unicredit in Italy to DNB in Norway.
Corporate VC (CVC) funding was quite diverse over the past 6 months, although AI remained high on the priority list,
along with regtech.
Challenger banks continue to excel in Europe
Challenger banks continued to thrive in Europe, particularly in the UK and Germany, where the regulatory
environment has been very supportive of alternative banking models. The top two fintech deals during the first half of
2018 in Europe came from challenger banks a $250 million Series C round by UK-based Revolut and a $160
million Series C round by Germany's N26. After showing some success locally, both Revolut and N26 are eyeing
expansion internationally, with Revolut looking to enter the US and Canada and N26 looking at Spain and the US.
Further, we continue to see traditional banks in Europe setting-up their own standalone digital banking overings in
order to complete with challenger banks such as Pepper, the digital-only bank of Israel's Bank Leumi.
Investment in regtech on the rise in Europe
Europe has been a hotbed of new regulations over the past 6 months. Given the implementation of PSD2 and the
UK's synonymous open-banking regulation and GDPR, it is no surprise that there has been a surge in regtech activity
as European-based companies and companies doing business in Europe look for efficient ways to manage their
compliance obligations and open-banking requirements.
Within Europe, the UK continued to be the main hub for regtech innovation, with two major deals in the first half of
2018: a $25 million Series C raise by CloudPay solutions and a $10 million raise by CloudMargin. While regtech is still
a relatively immature subsector of fintech, as evidenced by the relatively small deal sizes, it is evolving rapidly in terms
of scope. For example, European regtech companies range from UK-based CUBE, which uses machine learning to
enable automated compliance management to Ireland's Gecko Governance, which offers a blockchain-based solution
to manage compliance and Luxemburg-based REGIS-TR, which provides a one-stop reporting program for trade
transactions across the EU.
M&A powers fintech market in Europe in
first half of 2018
33
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Blockchain becoming EU priority
Over the past couple of years, there has been significant investment in blockchain investments across the EU. In April, 22
EU member countries signed a Declaration on the Creation of a European Blockchain Partnership in order to foster
collaboration across various blockchain initiatives and to help reduce barriers to potential cross-border blockchain solutions.
UK still attracting significant interest
Despite concerns about a potential hard Brexit in 2019, VC investors remained relatively bullish regarding fintech
opportunities in Europe. The first half of the year saw a number of significant raises in the UK, including four of the
region's top 10 fintech deals over the past 6 months: a $250 million raise by Revolut, a $100 million raise by eToro, a
$60 million raise by Flender and a $54 million raise by MoneyFarm.
During the first half of 2018, the UK government continued to take decisive action to support the continued strength of
the UK fintech market. In March, it released its first Fintech Sector Strategy which is expected to help the UK retain its
leadership in the fintech space in Europe10.
AI and RPA continued to be hot areas of investment for fintech investors in the UK, although interest in regtech also
picked up a significant amount of momentum during the first half of 2018.
Germany fintech hubs expanding reach
Fintech investment in Germany remained strong in the first half of 2018, with significant raises by N26 ($160 million)
and SolarisBank ($70 million). The strength of Germany's fintech market is becoming more globally recognized,
drawing in large international investors. For example, China tech giant Tencent invested in N26's most recent raise11.
While Berlin continued to be Germany's most prominent fintech hub, Hamburg and Frankfurt have also worked to
develop innovation hubs.
Ireland fintech market strengthens
Ireland's fintech market continued to punch above its weight in terms of fintech activity in the first half of 2018. The
country is quickly becoming an alternative powerhouse for fintech, with significant investments being made particularly
by global companies looking for a European launch platform or to take advantage of Ireland's strong fintech innovation
ecosystem. In the first half of 2018, a number of global companies announced expansion initiatives in Ireland.
Mastercard, for example, announced plans to hire 175 more people in its Ireland-based research lab, while Stripe
announced the establishment of an R&D centre.
The Government of Ireland continues to be a strong proponent of fintech innovation. It is currently in the process of
updating its international financial services strategy (IFS2025)12. The new plan is expected to have a strong fintech
component, including blockchain and digital ledger technology (DLT) opportunities.
Trends to watch for in Europe
Over the next 6 months, we predict investment in fintech in Europe will remain robust, with investments increasing in
areas like regtech, insurtech and wealth management. Fintechs focusing on the small business sector are also
expected to be a key priority for investors. Similar to other regions of the world, Europe is also projected to see
increasing interest in fintechs providing digital identification verification.
We will also likely see government interest in fintech grow in many jurisdictions across Europe as they begin to
recognize the applicability of technologies like blockchain to improve the efficiencies of government processes.
In mature fintech areas like payments and lending, there will likely be a significant amount of consolidation over the
next 6 to 12 months as the largest platforms become bigger and others fail to achieve scale.
M&A powers fintech market in Europe in
first half of 2018 (cont'd)
10 https://www.gov.uk/government/publications/fintech-sector-strategy
11 http://www.chinadaily.com.cn/a/201803/22/WS5ab30865a3105cdcf6513812.html
12 https://www.independent.ie/business/irish/new-state-plan-to-lure-financial-services-jobs-37091614.html
34
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech investment remains historically robust
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Note: The separate PE and M&A data sets both include PE buyouts as a transaction type per the Methodology section on page 56.
After a sustained run of elevated, if choppy, investment activity, the fintech scene in Europe has recorded a
downturn in the first half of 2018 in volume, although at the same time, deal values soared to the highest
levels yet recorded. This divergence is primarily due to relatively sudden downturn in early stage VC volume.
Total European fintech investment activity (VC, PE and M&A) in fintech companies
2012 30 June 2018
$0.6$2.2$0.3$0.3$0.6$0.3$1.5$1.1$3.9$5.7$5.3$3.2$2.8$0.7$3.5$6.3$0.7$3.5$0.5$0.6$1.2$2.9$2.8$4.3$19.3$6.70
20
40
60
80
100
120
140
160
180
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
35
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Venture investment in fintech companies in Europe
2012 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
The European venture scene is largely a patchwork of highly active metropolises, as stated in the prior
edition of the Pulse of Fintech. Hence, the downturn in early stage volume, which is the primary culprit behind
subdued fintech investment levels, can be further driven by an intermittent, infrequent decline in fintech
investing enthusiasm in even one metropolis. That said, the evening out of angel and seed financing volume
suggests venture volume will rebound somewhat within Europe's fintech scene in coming quarters.
VC invested steadies even as activity drops
0
20
40
60
80
100
120
140
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
l/s
36
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech M&A activity in Europe
2012 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
M&A volume has an off quarter, likely to rebound
$0.5$2.1$0.2$0.2$0.5$0.1$1.4$0.9$3.4$5.4$5.1$2.6$2.3$0.4$2.9$5.7$0.1$3.1$0.1$0.2$0.6$2.1$2.0$3.3$18.6$6.00
5
10
15
20
25
30
35
40
45
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
1Source: https://www.zdnet.com/article/australia-to-force-big-four-to-open-banking-data-by-july-2019/
All currency amounts are in US$, unless otherwise specified. Data provided by PitchBook.
"The real impact of PSD2 nd open banking has yet to be fully realized. In the months ahead we expect to
see a rise in the number of business opportunities, with companies and big tech players more aggressively
exploiting the data at their disposal. We should also see the emergence of new fintechs, leveraging a more
level playing field and creating value"
Anna Scally
Partner, Head of Technology and Media and Fintech Lead
KPMG in Ireland
37
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Median fintech venture financing size ($M) by stage in Europe
2013 30 June 2018
VC dry powder underpins hefty deal sizes
Median M&A size ($M) in Europe
2010 30 June 2018
$0.3
$0.5
$0.6
$0.8
$1.2
$1.5
$2.5
$2.1
$2.8
$2.6
$3.0
$5.0
$4.7
$8.2
$14.9
$10.0
$12.0
$13.0
Angel/Seed
Early VC
Later Stage VC
s
st

$38.5
$44.6
$26.7
$16.0
$36.7
$61.2
$11.0
$23.7
$60.4
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
2013
2014
2015
2016
2017
H1 2018
2010
2011
2012
2013
2014
2015
2016
2017
H1 2018
38
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
$1.5$2.2$0.3$1.5$1.9$0.3$2.3$2.3$0.3$0.1$0.1$0.3$0.4$1.8$0.6$1.7$13.1$3.00
10
20
30
40
50
60
70
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
Fintech VC, PE and M&A activity in the United Kingdom
2014 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
For any given country, fintech investment activity will likely remain choppy from quarter to quarter. The UK is
no exception, although given its hosting of London, one of the global financial centers, it enjoys higher highs
and lows than most. Accordingly, the blockbuster acquisition of WorldPay by Vantiv still stands out as one of
the largest fintech transactions of all time.
Fintech investment rebounds somewhat
"The UK continues to lead the charge for fintech investment in Europe representing half of the top 10
deals during H1'2018. Fintechs are increasingly applying for and receiving banking licenses and we
anticipate consolidation in that space in particular as some of the traditional financial institutions make
strategic acquisitions to position themselves for growth."
Anton Ruddenklau
Global Co-Leader of Fintech
KPMG International
39
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
A subdued period for German fintech
Fintech VC, PE and M&A activity in Germany
2014 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Note: The M&A data sets include PE buyouts as a transaction type per the Methodology section on page 56.
"European challenger banks are becoming very exciting to investors. N26 here in Germany and Revolut in
the UK are outpacing themselves in terms of clients they have driving further attention and interest not
only from European VCs but from global investors like Chinese technology giant Tencent. This interest
highlights the potential investors see in the market. Many global investors see digital banks as an entry
point into the European market."
Sven Korschinowski
Partner, Financial Services
KPMG in Germany
$18.8$80.3$18.3$520.9$22.2$305.4$840.8$460.0$196.9$114.6$93.2$73.5$177.3$200.8$1,177.1$135.1$269.0$53.90
5
10
15
20
25
$0.0
$200.0
$400.0
$600.0
$800.0
$1,000.0
$1,200.0
$1,400.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2014
2015
2016
2017
2018
Deal value ($M)
# of deals closed
40
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech VC, PE and M&A activity activity in France
2014 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Activity trends toward historical medians
0
2
4
6
8
10
12
14
16
18
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2014
2015
2016
2017
2018
Deal value ($M)
# of deals closed
41
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Top 10 European fintech deals in H1'18
10
7
6
3
8
5
4
9
2
1
WorldPay $12.9B, London, UK
Payments/transactions
M&A
Nets $5.5B, Ballerup, Denmark
Payments/transactions
Buyout
iZettle $2.2B, Stockholm, Sweden
Payments/transactions
M&A
IRIS Software Group $1.8B, Datchet, UK
Institutional/B2B
Buyout
Nordax Group $788.4M, Stockholm,
Sweden
Institutional/B2B
Buyout
7
8
6
9
10
5
4
3
2
1
ETF Securities $611M, London, UK
Wealth management
M&A
Yandex.Market $495.5M, Moscow, Russia
Payments/transactions
M&A
Revolut $250M, London, UK
Payments/transactions
Series C
Atom Bank $208M, Durham, UK
Consumer finance
PE growth
N26 $160.3M, Berlin, Germany
Consumer finance
Series C
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
In H1'18, investment in
fintech companies in
Asia
$16.8B
hit
across
162 deals
43
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
$14 billion Ant Financial deal propels fintech
investment in Asia to massive record high
Ant Financial's record-shattering $14 billion Series C funding round in Q2'18 lifted Asia's mid-year fintech
investment to a massive $16.8 billion compared to $5.4 billion in all of 2017. The single deal accounted for
over half of the $23 billion in VC fintech funding seen globally during the 6-month period.
Excluding this massive outlier deal, Asia still saw strong fintech investment, with quarter-over-quarter
increases in overall fintech investment in India, Australia and Singapore from Q1'18 to Q2'18. The number
of deals in Asia also rose at each deal stage during both Q1 and Q2'18.
Fintech market in China thriving setting pace for Asia
Fintech investment in China strengthened in the first half of 2018 compared to the end of 2017. In addition to
Ant Financial's massive deal, China saw four other $100 million+ megarounds including $290 million to
Dianrong, $160 million to WeCash, $130 million to Meili Jinrong, and $100 million to Tiantian Paiche.
The majority of banks in China have been expanding their focus to digital and developing transformation
strategies. This has led to an increase in B2B focused fintechs able to enable banking transformation. Banks
have invested in myriad areas, including blockchain, big data and AI.
Southeast Asia becomes target for fintech growth and global expansion
After achieving success domestically, a number of large fintechs primarily from China have set their
sights on countries within Southeast Asia as the next step in their growth agenda. With a large population,
relatively similar macroeconomics, large underbanked populations and a significant number of Chinese
people overseas, the region is seen as a strong stepping stone to further global expansion. At the same
time, a number of China's biggest companies are already making investments globally. In the first half of
2018, for example, Tencent invested in German challenger bank N26.
Within Southeast Asia, Singapore continued to drive regional collaboration including the development of
a regional fintech innovation sandbox. The MAS continued to focus on financial inclusion, but also started to
intensify its focus on encouraging insurtech innovation.
Financial services regulations continuing to evolve in Asia
During the first half of the year, China's central government announced plans to combine the banking and
insurance regulators into a single entity. This new authority will take ownership of much of the oversight
related to alternative financing and micro-lending, which previously had been managed provincially.
Because of the changes, the government has delayed the deadline for P2P regulatory filings until the end of
the year. Hong Kong (SAR) also saw some changes during the first half of the year, particularly in the area
of IPO exits as a result of new regulations allowing for different shareholder rights. The changes pave the
way for more companies to qualify for an IPO on the HKSE. Poor performance of China's stock exchanges
in recent months, however, could temper IPO activity somewhat.
Regtech slowly gaining traction in Asia
During the first half of 2018, regtech continued to gain slow traction in Asia, particularly in Australia and
Singapore where regulators have been strongly supportive of fintech innovation and in India where
technologies are required to enable the shift to a primarily cashless society.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
44
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
$14 billion Ant Financial deal propels fintech
investment in Asia to massive record high (cont'd)
Regtech slowly gaining traction in Asia (cont'd)
Much of the regtech focus in Asia has been around KYC and fraud prevention. One of the more mature
regtechs 6-year old Australia-based KYC company Encompass expanded into Hong Kong early in 2018.
While India has seen the introduction of a number of KYC-focused companies, such as SIGNZY an AI-driven
real-time authentication platform, it has also seen a number of more traditional regtech startups, including Fintellix
which leverages existing data infrastructure to address local regulatory reporting requirements.
From a regulatory standpoint, in February, Commonwealth Bank of Australia reported on the success of a
regtech pilot project it conducted in collaboration with ING13. The UK's Financial Conduct Authority acted as
an observer on the project in order to gain greater understanding of how AI and regtech can be used to help
organizations with managing complianc.
Techfins playing different role to fintechs in China
In China, a number of large tech players have made inroads into the provision of innovative financial services as
part of their value proposition. These technology firms have framed their offerings as a way to extend value to their
customers, rather than as a desire on their part to actively seek a role in the financial services market.
Australia issues first restricted banking license
In the first half of 2018, Australia's financial regulator provided its first restricted ADI license to a digital bank,
Volt Bank14, although more are expected to be issued in the coming quarters. The purpose of the new license
is to support digital banks entering the market and to encourage more competition.
Blockchain technologies slowly moving into production
In Asia, we continue to see Blockchain as a key priority for investors, similar to other regions of the world. While
most blockchain initiatives remained at the proof-of-concept (PoC) stage, a small number have begun moving into
production. For example, the Australia Stock Exchange is moving forward with a blockchain-based solution to
replace its current post-settlements process15, while WeBank in China is implementing a production blockchain
system16 to provide syndicated lending capabilities; the solution is currently is being used by three mid-tier banks.
Insurtech investment focused on process improvement
While insurtech investment lags behind investment in banking innovation in Asia, there has been increased
investment in insurtech able to help insurers improve processes such as intelligent automation, AI and
smart underwriting. A number of larger fintechs have also begun to expand their services into insurtech
embedding the offering into their portfolio of services in order to provide more value to their customers.
Trends to watch for in Asia
We see Asia being well positioned for continued growth in fintech investment over the remainder of the year ahead.
There will likely be a strong focus on global expansion among the larger, more mature fintechs. Blockchain and AI
will likely continue to be key priorities for fintech investors, in addition to insurtech and regtech. Over the next few
quarters, we also expect continued collaboration between organizations in Asia aimed at providing embedded
service offerings, such as the provision of travel insurance payouts based on flight delay data from airlines.
13 https://www.verdict.co.uk/retail-banker-international/opinion/ing-commonwealth-bank-regtech-pilot/
14 https://www.itnews.com.au/news/volt-bank-lands-digital-license-to-operate-in-australia-490432
15 https://www.bbc.com/news/business-42261456
16 http://news.8btc.com/tencent-webank-blockchain-based-buisness-system-is-ready
45
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech VC, PE and M&A activity in Asia
2012 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Note: The separate PE and M&A data sets both include PE buyouts as a transaction type per the Methodology section on page 56.
There has been a steady flow of investment in several key nations spanning the entire region: China, India,
Singapore and Australia. However, Ant Financial's $14 billion was a massive outlier deal.
Record investment in Asia
$0.2$0.0$0.1$0.1$0.3$0.1$0.1$0.4$1.4$0.6$0.4$1.8$2.1$1.7$4.8$0.8$2.9$5.5$2.0$1.4$0.9$2.4$1.1$1.0$1.1$15.70
20
40
60
80
100
120
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
"We are starting to see phase 2 of fintech innovation in Asia. Phase 1 was about domestic market
domination with successes like Ant Financial, Alibaba, WeChat and Tencent. Phase 2 has these companies
and other giants aspiring to expand globally. Already, we are seeing them making moves, particularly in
Southeast Asia where a large population and similar cultural dynamics make for compelling growth
opportunities."
Tek Yew Chia
Head of Financial Services Advisory
KPMG in Singapore
46
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech venture investment in Asia
2012 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
The choppy yet resilient level of VC activity within the region over the past handful of years speaks to the
encouragement of fintech entrepreneurship on the part of governments as well as the level of interest
exhibited by foreign sources of capital.
Gradual rebound in angel and seed volume
underpins rebound in activity
0
10
20
30
40
50
60
70
80
90
100
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
l/s
47
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
It is clear that the Asian fintech scene is still maturing overall and still is not quite as developed as other
regions, as consolidation is still kicking in. The fact that giant corporations dominate many aspects of fintech
already has also contributed to lower M&A volume. However, the fact M&A can rebound speaks to
increasing consolidation amid at least the smaller end of players, even if financial giants are holding
mammoth sums of growth-stage or late-stage capital.
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Consolidation ticks upward, driving greater
M&A volume
Fintech M&A activity in Asia
2010 30 June 2018
$254.0$80.9$13.3$251.7$1,058.1$383.6$49.4$1,385.5$1,767.8$479.4$390.3$130.2$999.6$152.0$207.3$517.4$87.8$374.9$247.9$222.0$25.8$611.00
2
4
6
8
10
12
14
16
18
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2013
2014
2015
2016
2017
2018
Deal value ($M)
# of deals closed
48
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services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Median fintech venture financing size ($M) by stage in Asia-Pacific
2015 30 June 2018
Late-stage figures soar upward steadily
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
$0.9
$0.9
$1.0
$1.0
$4.9
$7.5
$4.5
$9.7
$31.6
$17.0
$25.0
$37.7
Angel/Seed
Early VC
Later Stage VC
l s
sta

2015
2016
2017
H1 2018
49
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2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech venture investment in China
2014 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
After rebound in volume, a record broken
0
5
10
15
20
25
30
35
40
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
Recent coverage has asked what is next for the booming Chinese fintech scene and when analyzing
transactional activity, the answer is relatively clear: consolidation amid the major fintech sub-segments that
have dominated investment thus far, such as payments, while other startups will likely seek fervently for
funding to fuel their efforts in lesser heralded areas such as financial infrastructure and business lending.
"We are seeing large technology companies in China enabling financial institutions. Rather than entering
the market independently, they are finding ways to use their technology to serve customers better
making them techfins rather than fintechs. As long as they gain benefit from others applying their
technology, they are happy not to play a financial services role. They would rather leave the financial
services risk and control obligations to professional financial institutions."
Arthur Wang
Partner, Head of Banking
KPMG China
50
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2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech venture investment in India
2014 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Indian fintech VC volume resurges
Consumer finance as well as B2B lending remain key areas of focus for not only foreign but also domestic
financiers, both private and public. The steady rebound in investment throughout the past few quarters
speaks to just how ripe some key segments are perceived to be by suppliers of capital; although aggregate
VC invested is still often skewed by a couple large firms doubling down on their particular domains, such as
PolicyBazaar.
0
5
10
15
20
25
30
35
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
51
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2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech VC, PE and M&A activity in Singapore
2014 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Note: The separate PE and M&A data sets both include PE buyouts as a transaction type per the Methodology section on page 56. An
adjustment has been made to some of the prior quarters due to a reassessment of the underlying companies to ensure accuracy o f the
underlying dataset.
A healthy half-year for Singapore
0
2
4
6
8
10
12
14
16
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2014
2015
2016
2017
2018
Deal value ($M)
# of deals closed
"Southeast Asia is becoming very significant for the development of blockchain. The cultural ecosystem,
economy, and many governments are focused on driving blockchain development. This holistic innovation
effort is also evident in the Middle East, where governments are playing a significant role in innovating and
stimulating their economies through the economic development associated with technology. In other
regions, government adopts a more neutral approach where innovation is driven directly by the
commercial sector."
Eamonn Maguire
Global Lead of Blockchain
KPMG International
52
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2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Fintech VC, PE and M&A activity in Australia
2014 30 June 2018
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018.
Note: The separate PE and M&A data sets both include PE buyouts as a transaction type per the Methodology section on page 56.
The above chart does not include the AUD40 million investment in zipMoney by Westpac as this was a private investment in publ ic equity and
such deal types are specifically excluded from the scope of this report.
Steady investment volume continues
0
2
4
6
8
10
12
14
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2014
2015
2016
2017
2018
Deal value ($M)
# of deals closed
53
#fintechpulse
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Top 10 fintech deals in Asia in H1'18
6
Ant Financial $14B, Hangzhou, China
Institutional/B2B
Series C
Dianrong $290M, Shanghai, China
Lending
Series D
PolicyBazaar $200M, Gurugram, India
Consumer finance
Series F
Wecash $160M, Beijing, China
Consumer finance
Series D
Meili Jinrong $129.9M, Beijing, China
Lending
Series B
7
8
6
9
10
5
4
3
2
1
Tiantian Paiche $100M, Shanghai, China
Payments/transactions
Corporate
Lendingkart $87.7M, Ahmedabad, India
Lending
Series C
Pine Labs $82M, Noida, India
Payments/transactions
PE growth
Capital Float $67M, Bengaluru, India
Lending
Series C
9F $65M, Beijing, China
Lending
Series D
3
8
9
2
1
Source: Pulse of Fintech 2018, Global analysis of investment in fintech, KPMG International (data provided by PitchBook) 9 July, 2018
10
5
7
4
54
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2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
KPMG Fintech global network (countries and
jurisdictions)
Contact us:
Ian Pollari
Global Co-Leader of Fintech,
KPMG International
E: ipollari@kpmg.com.au
Anton Ruddenklau
Global Co-Leader of Fintech,
KPMG International
E: anton.ruddenklau@kpmg.co.uk
Netherlands
Australia
Hong Kong (SAR)
Luxembourg
USA
UK
Israel
South Africa
Germany
Ireland
India
Singapore
Canada
France
Spain
Sweden
Denmark
Norway
China
Japan
Korea
Taiwan (jurisdiction)
Nigeria
Italy
Brazil
UAE
Mexico
The Financial Services industry is transforming with the emergence of innovative new products, channels and
business models. This wave of change is primarily driven by evolving customer expectations, digitalization, as well as
continued regulatory and cost pressures. KPMG firms are passionate about supporting clients to successfully navigate
this transformation, mitigating the threats and capitalizing on the opportunities. KPMG Global Fintech professionals
include partners and staff in over 45 fintech hubs around the world, working closely with financial institutions and
fintech companies to help them understand the signals of change, identify the growth opportunities and to develop and
execute on their strategic plans.
About KPMG Fintech
Tunisia
Cyprus
Bahrain
Russia
Malta
Turkey
Belgium
Netherlands
Switzerland
Hungary
Kenya
Kazakhstan
Malaysia
Indonesia
Bermuda
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New Zealand
Jersey
55
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2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Acknowledgements
We acknowledge the contribution of the following individuals who assisted in the
development of this publication:
Ian Pollari, Global Co-Leader of Fintech, KPMG International and Partner and National Sector Leader, Banking,
KPMG Australia
Anton Ruddenklau, Global Co-Leader of Fintech, KPMG International and Head of Digital & Innovation, Financial Services
and Partner, KPMG in the UK
Anna Scally, Head of Technology and Media and Fintech Leader, KPMG in Ireland
Anne Joyce, Senior Marketing Manager, Banking & Capital Markets and Fintech, KPMG International
Arthur Wang, Partner, Head of Banking, KPMG China
Brian Hughes, Co-Leader, KPMG Enterprise Innovative Startups Network, and Partner, KPMG in the US
Chris Higgins, Senior Manager, Fintech, KPMG in the UK
David Milligan, Global lead, KPMG Matchi and Associate Director, KPMG in South Africa
Eamonn Maguire, Global Head of Digital Ledger Services, KPMG International, and Managing Director, KPMG in the US
Fabiano Gobbo, Global Head of Regtech, KPMG International and Risk Consulting Partner, KPMG in Italy
John Armstrong, National Industry Leader, Financial Services, KPMG in Canada
Pauline Berry, Marketing Coordinator, Financial Services, KPMG International
Safwan Zaheer, Director, Financial Services Digital & Fintech Lead, KPMG in the US
Sven Korschinowski, Partner, Financial Services, KPMG in Germany
Tek Yew Chia, Head of Financial Services Advisory, KPMG in Singapore
Will Pritchett, Global Head of Regtech, KPMG International and Financial Services Technology Partner, KPMG in the UK
56
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services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Methodology
Within this publication, only completed transactions regardless of type are tracked by PitchBook, with all deal
values for general M&A transactions as well as venture rounds remaining un-estimated. Standalone datasets on
private equity activity, however, have extrapolated deal values.
Please note that the MESA and Africa regions are NOT broken out in this report. Accordingly, if you add up the
Americas, Asia-Pacific and Europe regional totals, they will not match the global total, as the global total takes into
account those other regions. Those specific regions were not highlighted in this report due to a paucity of datasets
and verifiable trends.
Venture deals
PitchBook includes equity investments into startup companies from an outside source. Investment does not
necessarily have to be taken from an institutional investor. This can include investment from individual angel
investors, angel groups, seed funds, venture capital firms, corporate venture firms, and corporate investors.
Investments received as part of an accelerator program are not included, however, if the accelerator continues to
invest in follow-on rounds, those further financings are included. All financings are of companies headquartered in
the US.
Angel/seed: PitchBook defines financings as angel rounds if there are no PE or VC firms involved in the company to
date and it cannot determine if any PE or VC firms are participating. In addition, if there is a press release that
states the round is an angel round, it is classified as such. Finally, if a news story or press release only mentions
individuals making investments in a financing, it is also classified as angel. As for seed, when the investors and/or
press release state that a round is a seed financing, or it is for less than $500,000 and is the first round as reported
by a government filing, it is classified as such. If angels are the only investors, then a round is only marked as seed
if it is explicitly stated.
Early-stage: Rounds are generally classified as Series A or B (which PitchBook typically aggregates together
as early stage) either by the series of stock issued in the financing or, if that information is unavailable, by a
series of factors including: the age of the company, prior financing history, company status, participating
investors, and more.
Late-stage: Rounds are generally classified as Series C or D or later (which PitchBook typically aggregates
together as late stage) either by the series of stock issued in the financing or, if that information is unavailable, by
a series of factors including: the age of the company, prior financing history, company status, participating
investors, and more.
Growth equity: Rounds must include at least one investor tagged as growth/expansion, while deal size must either
be $15 million or more (although rounds of undisclosed size that meet all other criteria are included). In addition,
the deal must be classified as growth/expansion or later-stage VC in the PitchBook Platform. If the financing is
tagged as late-stage VC it is included regardless of industry. Also, if a company is tagged with any PitchBook
vertical, excepting manufacturing and infrastructure, it is kept. Otherwise, the following industries are excluded
from growth equity financing calculations: buildings and property, thrifts and mortgage finance, real estate
investment trusts, and oil & gas equipment, utilities, exploration, production and refining. Lastly, the company in
question must not have had an M&A event, buyout, or IPO completed prior to the round in question.
Corporate venture capital: Financings classified as corporate venture capital include rounds that saw both firms
investing via established CVC arms or corporations making equity investments off balance sheets or whatever
other non-CVC method actually employed.
Corporate: Corporate rounds of funding for currently venture-backed startups that meet the criteria for other
PitchBook venture financings are included in the Pulse of Fintech as of March 2018.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
57
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services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
All currency amounts are in US$ unless otherwise specified. Data provided by PitchBook
unless otherwise specified.
Exits
PitchBook includes the first majority liquidity event for holders of equity securities of venture-backed companies. This
includes events where there is a public market for the shares (IPO) or the acquisition of majority of the equity by another
entity (corporate or financial acquisition). This does not include secondary sales, further sales after the initial liquidity
event, or bankruptcies. M&A value is based on reported or disclosed figures, with no estimation used to assess the value
of transactions for which the actual deal size is unknown.
Fundraising
PitchBook defines venture capital funds as pools of capital raised for the purpose of investing in the equity of startup
companies. In addition to funds raised by traditional venture capital firms, PitchBook also includes funds raised by any
institution with the primary intent stated above. Funds identifying as growth-stage vehicles are classified as PE funds and
are not included in this report. A fund's location is determined by the country in which the fund is domiciled, if that
information is not explicitly known, the headquarters country of the fund's general partner is used. Only funds based in the
United States that have held their final close are included in the fundraising numbers. The entirety of a fund's committed
capital is attributed to the year of the final close of the fund. Interim close amounts are not recorded in the year of the interim
close.
M&A
PitchBook defines M&A as a transaction in which one company purchases a controlling stake in another company. Eligible
transaction types include control acquisitions, leveraged buyouts (LBOs), corporate divestitures, reverse mergers, mergers
of equals, spin-offs, asset divestitures and asset acquisitions. Debt restructurings or any other liquidity, self-tender or
internal reorganizations are not included. More than 50% of the company must be acquired in the transaction. Minority stake
transactions (less than a 50% stake) are not included. Small business transactions are not included in this report.
Fintech
A portmanteau of finance and technology, the term refers to businesses who are using technology to operate outside of
traditional financial services business models to change how financial services are offered. Fintech also includes firms that
use technology to improve the competitive advantage of traditional financial services firms and the financial functions and
behaviors of consumers and enterprises alike.
1. Payments/Transactions Companies whose business model revolves around using technology to provide the transfer of
value as a service and/or ANY company whose core business is predicated on distributed ledger (blockchain) technology
AND/OR relating to any use case of cryptocurrency (e.g. Bitcoin).
2. Lending Any non-bank who uses a technology platform to lend money often implementing alternative data and analytics OR
any company whose primary business involves providing data and analytics to online lenders or investors in online loans.
3.
Investment Banking/Capital Markets Companies whose primary business involves the types of financial intermediation
historically performed by investment banks.
4.
Insurtech Companies whose primary business involves the novel use of technology in order to price, distribute, or offer
insurance directly.
5. Wealth/Investment Management Platforms whose primary business involves the offering of wealth management or
investment management services using technology to increase efficiency, lower fees or provide differentiated offerings
compared to the traditional business model. Also includes technology platforms for retail investors to share ideas and
insights both via quantitative and qualitative research.
6. Personal Finance Companies that provide a technology-driven service to improve retail customers' finances by allowing
them to monitor spending, savings, credit score or tax liability OR leveraging technology to offer basic retail banking
services such as checking or savings accounts outside of a traditional brick and mortar bank.
7.
Institutional/B2B Fintech Companies that offer technology-driven solutions and services to enterprises or financial
institutions. These include software to automate financial processes, well financial security (excluding blockchain),
authentication as well as traditional and alternative data utilized by financial or other institutions and enterprises to make
strategic decisions.
8. Regtech Companies who provide a technology-driven service to facilitate and streamline compliance with regulations
and reporting as well as protect from employee and customer fraud.
9. Techfin Primarily focused on serving existing financial institutions and models, techfin seeks to optimize extant
processes and technologies via incremental improvements, such as offering a better user experience on the mobile
application of a traditional bank, as opposed to developing a full-service mobile bank offering.
Methodology (cont'd)
To connect with a KPMG advisor in your region, visit
kpmg.com/fintech
kpmg.com/fintechpulse
twitter.com/kpmg
linkedin.com/company/kpmg
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that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough
examination of the particular situation.
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