The fintech industry had a dynamic year in 2017. The industry as a whole adopted a more stable pace of growth, and new regulations opened up more opportunities for startups. We also began to see greater cooperation between globally dispersed fintech hubs, and new hotspots of fintech activity come to the fore. And, while older fintech segments definitively secured their spot in the broader financial system, new categories of fintech also took off at an astounding pace. Based on these developments, our proprietary research, and the trends we’ve seen intensifying as we head into the new year, here are our top five predictions for fintech in 2018:
1. We’ll start seeing quantifiable results of fintech partnerships. The past year saw a flurry of fintech agreements formed between regulators and fintech centers in ever-more geographies. These agreements give participants a forum in which to discuss developments across fintech markets, and allow different countries’ fintechs to set up shop in each other's jurisdictions and leverage local resources more easily. However, while these deals have become ubiquitous, we’ve yet to see them produce tangible results. This seems likely to happen next year, as some of the earliest agreements, like the pact between the UK's Financial Conduct Authority and the People’s Bank of China, have had time to mature. As such, in 2018, we can expect to see outcomes that may include fintechs receiving funding and partnership deals in their partner countries, agreement participants aligning their fintech regulatory regimes to make compliance easier for each other's startups, and an upsurge in participant countries’ fintech industries. Once results start materializing, this will prompt more such deals to be formed.
2. Global fintech funding will climb back to historic highs of around $45 billion. The growth will be driven by more mature fintechs with proven business models requiring larger sums in order to scale, particularly in the alt lending and insurtech segments. Additionally, we expect to see increased volumes of corporate investment. That will come from legacy financial services players in particular, which will put more into fintechs, either directly or via corporate venture arms. Such investment will be prompted by incumbents’ increasing confidence in their skill at understanding fintechs’ business models, along with their growing [...]