China Drags Down Fintech Company Investments In First Half Of 2019

Funding going toward financial technology startups declined during the first half of this year, with China experiencing a big dip.

That’s according to Accenture, which said a strong showing on the part of Chinese fintechs last year, led to the decline in the first six months of 2019. The decline also weighed on the U.S., UK, and other markets.

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According to the consulting firm, the total value of fintech deals on a global basis was $22 billion for the six months ending in June which compares to $31.2 billion in the same period a year ago. It marks a 29% decline and was due largely to a lack of mega-deals such as Ant Financial, the Chinese fintech company that raised a record $14 billion in May. Excluding mega deals from 2018, fintech startup funding would have increased 28% in the first half of this year compared to last year.

While China is having a rough go of it this year, fintech companies in the U.S. and UK have enjoyed strong interest from investors so far in 2019. Accenture found the value of deals in the U.S. increased 60% to $12.7 billion. That comes even as the number of deals was in line with last year and signals larger deals are fueling growth. Much of the funding went to more established players. The consulting firm found lending startups garnered the most attention.

Across the pond in the UK, Accenture said investments in fintech companies close to double to around $2.6 billion. The number of deals increased 25% to 263 with challenge banks and digital payment startups leading the charge. During the first half of this year Monzo, Starling Bank, and Transferwise all raised funding.

“There’s been a lot of interest and demand from consumers for new fintech propositions, particularly in the U.K. and elsewhere in Europe, which helps explain the big jump in investments there,” said Julian Skan, a senior managing director of Accenture's Financial Services practice in a press release announcing the results for the first six months of the year.. “Fundraising is also moving to support the scaling up of challenger and collaborative fintech, which will cause lumpiness in some rounds as we get to the business end of the investment cycle where investors look for returns based on a sustainable bottom line, rather than another buyer.”

Other parts of Europe also saw an uptick in fintech company investments. Fintech companies in Germany saw investments more than double to $829 million from $406 million a year ago. The investments were led by N26, the German bank challenger that raised $300 million at the start of the year. Investments in Sweden nearly quadrupled to $573 million while France’s financial technology startups raised $423 million, marking a 48% increase over the first six months of 2018.