FinTech companies are already closely involved in the daily lives of quite a lot of people, whether we’re talking about a person in Africa setting up their own business with a micro-loan, making payments in San Francisco by means of an electronic wallet, or making regular savings via a smartphone app. Nowadays these financial sector startups have the wind in their sails. A report published by international audit and consultancy firm KPMG, entitled The Pulse of Fintech, in 2017 revealed that FinTech specialists garnered a total of $31 billion worth of investment that year, up from $25 billion in 2016. Now the latest edition of the report , which has just come out, shows there is no let-up in the rise of FinTech. The first half of this year saw $57.9 bn worth of capital invested in this sector through fund-raising rounds or straight takeovers. This record figure has been buoyed by two deals in particular among the 875 concluded in first-half 2018 – the $14 bn raised by Ant Financial, the financial arm of Chinese e-commerce giant Alibaba; and the $12.9 bn acquisition of one of the leading payments specialists, WorldPay, by rival firm Vantiv. A majority of the deals in question (504) were done in North America, for a total of $14.8 bn, much less than the $26 bn invested in the 198 deals in Europe and slightly under the $16.8 billion pumped into the 162 deals done in Asia. Almost half (427) of all the funding transactions or acquisitions were carried out in the United States alone, proof – if proof were needed – that the US remains a FinTech hotbed. However, in a recently-published report entitled A Financial System that Creates Economic Opportunities: Nonbank Financials, Fintech, and Innovation, the US Department of the Treasury warns that action is needed to keep pace with changes taking place and ensure that the country does not lose this advantage. In order to maintain a favourable climate for FinTech businesses, the Treasury Department recommends especially: “adapting regulatory approaches to changes in the aggregation, sharing and use of consumer financial data and to support the development of key competitive technologies” and taking steps to “account for new business models enabled by financial technologies,” as well as “advocating an approach to regulation that enables responsible experimentation in the financial sector, improves regulatory agility, and advances American interests abroad.” This advice seems to be bang on target, given the competitive situation described in the KPMG report.
By Sophia Qadiri