Global investment in fintech ventures tripled from $4.05 billion in 2013 to $12.2 billion in 2014, with Europe being the fastest growing region in the world, according to a new report by Accenture.
While the United States still captures the lion’s share of fintech investment, Europe experienced the highest growth rate, with an increase of 215% to $1.48 billion in 2014. The United Kingdom and Ireland accounted for more than two-fifths (42 percent) of the European total, as investment in the region rose from $264 million in 2013 to $623 million in 2014.
In the rest of Europe, the regions that experienced the most significant levels of investment in 2014 were the Nordic countries ($345 million), the Netherlands ($306 million) and Germany ($82 million).
Julian Skan, Accenture managing director overseeing the FinTech Innovation Lab London, sees the figures as representing both a threat and an opportunity for established banks. “Fintech is empowering new competitors and start-ups to move into parts of the banking business but, paradoxically, it is also helping banks to create better, more convenient products and services for their clients," he says. "It is also leading to increased cooperation between traditional banks and innovative start-ups and technology businesses in a way that can result in totally new business models and revenue streams.”
The report was released at the third annual 'Investor Day' of Accenture's FinTech Innovation Lab London. The 14 companies that have so far passed through the programme have raised more than $35 million in new investment, signed nearly 50 contracts to do business with banks and increased revenues by 170% claims the consultancy.
In addition to the fintech investment-data, Accenture conducted an indicative survey of 25 innovation-focused senior banking executives from across the banks that participate in the London and Dublin Labs.
Almost three-quarters of respondents feel their banks have a fragmented or opportunistic approach to dealing with digital innovation, and 40% think the time it takes their organisation to deploy new technology is too slow, either negatively impacting their ability to realise value or providing no net benefit at all.
The vast majority also believe that they lack the skills and culture needed to succeed in the digital age. In addition, although 80% see working with start-ups as a valuable way to bring new ideas to their business, 56% claim that their organisational cultures need to change in order to work effectively with start-ups.
A majority of respondents (72%) expect their banks to increase investment in technology innovation over the next two years. Fifty-six percent say their banks will explore open innovation, such as opening up their intellectual property, assets and expertise to outside innovators to help generate new ideas and discover new areas for growth. Thirty-two percent say their banks will create a corporate venture arm within the next two years. A majority (60%) are also open to sacrificing current revenue in order to move to new business models.