According to Robert Gach, Capital Markets managing director for Accenture Strategy, “We are now in a golden age of fintech.” Global investment in financial technology, or fintech, grew rapidly between 2010 and 2015, rising from $1.8 billion to $22.3 billion. A closer look at the figures, however, reveals a number of important distinctions among markets.
North America accounts for more than half of all fintech investment worldwide. Of the $22.3 billion invested in fintech in 2015, $11.4 went to North America, $3.8 went to Asia Pacific and $2.9 went to Europe.
New York City is emerging as the global center of fintech innovation. Between 2014 and 2015, fintech investment in the city more than tripled, reaching $2.3 billion and accounting for roughly 10 percent of the worldwide total. In the first quarter of 2016 alone, New York posted $690 million worth of fintech deals, surpassing Silicon Valley for the first time ever.
Globally, more fintech funding goes to competitive ventures than collaborative ventures.
The share of global fintech funding devoted to ventures seeking to compete with financial institutions has remained relatively stable at around 62 percent over the past five years.
Europe has seen growth in competitive fintech ventures. Between 2010 and 2015, investment in competitive fintech ventures increased from 62 percent to 86 percent in Europe. That’s not surprising given that the European regulatory environment promotes startup competition in banking and insurance, makes it easier to establish new payment services and encourages banks to offer card payment alternatives.
North America and Asia Pacific have witnessed a decline in competitive fintech ventures.
Between 2010 and 2015, investment in competitive fintech ventures decreased from 60 percent to 40 percent in North America, and from 93 percent to 84 percent in Asia Pacific. The US regulatory environment, in particular, encourages collaboration by making it challenging for tech startups to become full-fledged financial institutions on their own.
The New York City fintech scene favors collaborative fintech ventures more than any other market.
Between 2010 and 2015, the share of fintech investment devoted to collaborative ventures in New York City more than doubled, from 37 percent to 83 percent. The New York FinTech Innovation Lab, co-founded by Accenture and the Partnership Fund for New York City, has seen financial institution participation in its fintech mentorship program nearly triple over the same period.
As fintech investment shifts from competitive to collaborative ventures, it creates new opportunities for financial institutions that are ready to innovate. In 2015, banks participated in less than 10 percent of all reported fintech deals. Going forward, they will need to step up their game and step up to the plate if they want to reap the full rewards.