KEY POINTS

  • The fintech industry is no longer a distinct entity from traditional financial services. Virtually every incumbent financial institution (FI) is now engaging in an innovation drive, spurred on by competition from tech-savvy startups. Additionally, incumbents are now actively investing in, acquiring, and collaborating with their fintech rivals. This growth in partnerships points to the paradigm shift taking place within financial services, as incumbents and fintechs redraw the boundaries that once separated them.
  • Fintech funding has already reached new highs globally in 2018. Overall funding hit $32.6 billion at the end of Q3, up 82% from 2017’s total figure. This acceleration in fintech activity can be primarily attributed to Q2, when fintechs secured $20.6 billion, accounting for almost two-thirds of the total from Q1 to Q3. We saw 1,164 fintech funding deals occur through Q3, and this number is expected to rise to 1,460 by the end of the year, per CB Insights, which would be a new record for the fintech industry.
  • More established fintech segments are showing clear signs of maturation. We've seen considerable scaling in older corners of the fintech ecosystem, including among neobanks and alt lenders. Additionally, the payments industry continues to mature and is one of the few segments to boast at least one profitable fintech; UK-based cross-border money transfer company TransferWise turned a profit for the second year in a [...]