Deals in the second half of 2018 were topped by Blackstone's $17B investment in Refinitiv, the $3.5B acquisition of Blackhawk Network by Silver Lake and P2 Capital Partners, the $3.4B buyout of VeriFone by Francisco Partners, and the $2.2B acquisition of iZettle by PayPal. These deals followed on the $12.86B acquisition of WorldPay by Vantiv in H1'18.

Fintech deal volume declined markedly in the second half of 2018, but still reached 2,196 deals for the year, up from 2,165 in 2017. Increasing geographic diversity of fintech VC funding continues to help drive deal volume, even as larger fintech hubs see more concentrated investment in larger deals.

“The growing deal sizes, higher levels of M&A activity and the geographic spread of deals all highlight the increasing maturation of the fintech sector on a global scale,” said Ian Pollari, Global Co-Lead, KPMG Fintech. “Fintech start-ups in markets as diverse as Germany and Brazil are attracting larger and later stage rounds, while the more established fintech leaders in the US, UK and Asia are making their own investments and acquisitions in order to expand their product and geographic reach.”
2018 Key Highlights

Mega deals drove a record $111.8B global fintech investment in 2018, led by three $10B+ deals, as well as an additional 14 $1B+ M&A deals. All told, 2018 was a year of multiple record highs across fintech investment, including VC, corporate VC, M&A and PE.
Fintech investment in the Americas rose from $29B in 2017 to $54.5B in 2018. Deals volume also increased from 1,039 deals to 1,245. The US accounted for the bulk of this funding - $52.5B across 1,061 deals.
European fintech investment for 2018 increased sharply to $34.2B from $12.2B in 2017, thanks to massive M&A and buyout deals, including WorldPay ($12.8B), Nets ($5.5B), iZettle ($2.2B), Fidessa Group ($2.1B), and IRIS Software Group ($1.75B).
The total Asia Pacific fintech investment for 2018 of $22.7B, up from $12.5B in 2017, was dominated by Ant Financial's record-setting $14B deal in Q2'18, as fintech investment in the region slowed significantly in the second half of the year.
Cross-border M&A rose significantly in 2018, with approximately $53.5B invested across borders in 155 deals, up from $18.9B in 153 cross-border deals in 2017. The US drew $28B in cross-border M&A, while Europe attracted $21.6B.
Investment flowed at a significant pace into key subsectors and technologies - regtech investment surged to $3.7B in 2018 from $1.2B in 2017, while investment in blockchain remained strong at $4.5B in 2018, just off the $4.8B in 2017.

“Beyond new fintech-fueled business models, the increasing regulatory and legal obligations emanating from PSD2, GDPR and other regulations are impacting both established players and emerging fintechs,” said Anton Ruddenklau, Global Co-Lead, KPMG Fintech. “As a result, there is increasing interest in technologies - like AI and machine learning - that can be used to help manage compliance requirements more effectively. There's little doubt that technology investment is going to go up, up, up.”
US sees record fintech investment and deal volume

US fintech investment for 2018 more than doubled to $52.5B, from $24B in 2017, across a record 1,061 deals. While M&A and buyout activity accounted for the majority of this funding, US-based fintech VC funding also rose significantly, from $7B to $11.4B. The $17B Refinitiv deal dominated the $25.4B investment in Q4'18.
Canada and Brazil continue to expand fintech investment

Latin America was a strong target for fintech investors in 2018, with Brazil achieving a record high of $556M across 28 deals. Canada saw a record 119 fintech deals in 2018 - bringing in $1.18B of investment.
Europe sees record annual investment despite decline in Q3 and Q4'18

European fintech rose exponentially in 2018 to a record $34.2B raised across 536 deals, compared to $12.2B in 2017. Much of the 2018 funding occurred during the first half of the year, with total investment slumping to $4.3B in Q3'18, and to $1.3B in Q4'18 - an eight-quarter low.

The UK's $20.7B, up from $5.6B in 2017, accounted for the majority of fintech funding for the region - more than half of which came from the $12.8B WorldPay acquisition in the first half of the year. Q3 and Q4'18 investment dropping significantly, suggesting that fintech investors in the UK may have drawn back due to Brexit uncertainties.

Germany and France experienced a drop-off of fintech investment in 2018. In Germany, $1B was raised across 57 deals, compared to $1.7B across 88 deals in 2017, while France saw $294M raised on 34 deals in 2018 versus $733M on 50 deals a year earlier.
Asian fintechs attract $22.7B in funding - on strength of Ant Financial deal

Fintech investment in Asia rose from $12.5B in 2017 to a record high $22.7B in 2018, while deals volume dropped marginally from 382 to 372. VC investment was particularly strong in the fintech space in Asia, accounting for $19.6B in investment.

China accounted for the lion's share of Asia fintech investment, with $18.2 billion in funding during 2018 across 83 deals, led by Ant Financial's $14B raise in Q2. India fintech funding declined year-over-year, although still reaching $1.7B across a record 115 deals, while investment and deal volume in Singapore grew for the fourth straight year, accounting for $347M across 61 deals. Australia saw $572M across 28 deals.
Fintech investment expected to remain strong in 2019 despite increasing uncertainty

While geopolitical volatility and trade concerns could put a damper on fintech investment in 2019, the strong diversity of global fintech hubs, and the strengthening of subsectors, such as regtech and insurtech, should contribute to continued growth. AI and automation are expected to remain very hot areas of investor interest at the technology level.

*All figures are in US dollars