Investments in financial technology (fintech) continued at a remarkable pace last year, nearly tripling in the United States in 2014, according to a new report by Accenture (NYSE:ACN) and the Partnership Fund for New York City.
The value of fintech investments in the United States soared to $9.89 billion in 2014, up from $3.39 billion in 2013. This 191 percent increase dwarfs the increase in 2013, when fintech deal values in the United States climbed 68 percent. In New York, fintech deal values grew by 32 percent in 2014, to a new high of $768 million.
The report, Fintech New York: Partnerships, Platforms and Open Innovation, was released this week at the FinTech Innovation Lab’s fifth annual Demo Day event in New York. According to the report, global fintech investment tripled in 2014, to $12.2 billion, from $4.05 billion in 2013. By comparison, the overall market for venture-capital investing increased only 63 percent during that period.
Robert Gach, managing director of Accenture Strategy Capital Markets, stated:
“This past year marked a paradigm shift in how financial services companies approach and embrace fintech innovation, as they recognize the vast potential that this strong network provides. An increasing number of banks and insurers are investing in connecting into the fintech ecosystem, whether through accelerator or incubator labs, venture investments or in other ways. We believe this explosive growth in fintech will help drive innovation within some of the world’s largest financial institutions.”
The report notes that hot areas for fintech investment in 2014 included payments, lending, trading technologies and wealth management. Payments accounted for the largest number of fintech deals in the United States in 2014, 29 percent.
In New York, however, the total number of fintech deals in payment companies has trended downward, from 33 percent of all fintech deals in 2012 to 21 percent in 2014. Lending was the second-biggest investment area for U.S. fintech investments in 2014, accounting for 16 percent of such investments.
The report also highlights that New York is attracting more venture investments into wealth management and markets (which includes trading platforms) segments on a percentage basis than the rest of the United States. More than four of every 10 (42 percent) fintech deals in New York in 2014 were in one of the segments highlighted above. These same fintech segments, however, represented just 21 percent of deal volume in the United States.
“For fintech entrepreneurs, New York provides key advantages that no other city can match – notably close access to potential customers, and a deep talent pool of individuals with an intricate understanding of the financial services industry. With each passing year, New York City’s fintech industry becomes more established and a larger force in the city’s entrepreneurial and financial services ecosystem.”