According to an analysis from the research firm, the contraction is likely “due in part to the continued pull back in early-stage investing.” Further, a $14 billion investment from Ant Financial also skewered quarterly metrics, and after adjusting for that deal, funding in Q3 of 2019 actually represents a quarterly milestone at $8.9 billion.
For the year, fintechs have already surpassed 2017’s total investment by reaching $24.6 billion. However, early-stage deals, like seed and angel funding or Series A round investments, dropped to an eleven-quarter bottom, with early-stage funding reaching a seven-quarter bottom.
Globally, fintech deals grew 6% across the board from Q2 of 2019, although the newest results show a drop in every quarter this year when compared to its counterpart from 2018. The U.S. saw some of the least robust activity, dropping to $3.9 billion, although it was salvaged by a few “mega-round” investments. With respect to U.S. activity, the report states: “Deals dropped for the second consecutive quarter to 156, an [eleven] quarter low. The quarter did see [two] new unicorns: insurer Hippo and working capital lender C2FO. The top deal was a $350M Series E to Ohio-based auto insurer Root,” according to information from the report.
From Twitter
Miramar Global @Miramar_Global
American #investors have been involved in $4.4bn (£3.4bn) worth of deals into #UK firms so far in 2019, with London businesses accounting for more than three-quarters of the investment https://bit.ly/347yqGR #london #fintech #technology #funding
Other regions outside of the U.S. saw bigger relative gains, for example, as Southeast Asia fintech reached a new annual peak. The region saw $701 million invested through 87 deals. India and China also saw a strong quarter. “India and China continued to do battle over the title of Asia’s top fintech hub in Q3’19: China saw deals surge to 55 in the quarter, reclaiming the lead from India, which saw 33 deals,” according to the report.
From Twitter
ARC Briefing @ARCBriefing
Visa is reportedly in advanced talks to buy a 20% stake in #Nigeria’s largest electronic payments company, #Interswitch, in a deal worth $200m. The investment from Visa would confirm Interswitch’s status as Africa’s first fintech #unicorn http://bit.ly/2wiqcuh
What Role Will 'Open Banking' Have as Fintechs Continue to Wheel and Deal
Another report from the Basel Committee on Banking Supervision (PDF) offered insights into how global banking has adapted to the changes to the global financial ecosystem. Specifically, the report noted how the relatively easy sharing of user data with third parties has helped fuel the fintech industry.
“While the sharing of bank-held customer-permissioned data with third parties has been taking place for many years, increased use of digital devices and rapidly advancing data aggregation techniques are transforming retail banking services across the globe,” the report reads. “This sharing of customer-permissioned data by banks with third parties is leveraged to build applications and services that provide faster and easier payments, greater financial transparency options for account holders, new and improved account services, and marketing and cross-selling opportunities.”
The report notes, many banking jurisdictions have, or are likely to “adopt some form of an open banking framework.” However, there are some risks associated with new banking norms. “Open banking has the potential to transform banking services and bank business models. However, banks and bank supervisors will need to pay greater attention to the risks that accompany… the increased sharing of customer-permissioned data; and… the growing connectivity of various entities involved in the provision of financial services,” the report reads.
