UK leads Europe in fintech expansion

Record investment in fintech start-ups last year hit a transaction value of $30.8bn, almost double 2017 figures according to a study by international tech M&A advisor Hampleton Partners.

Hampleton Partners Director Jonathan Simnett stated: "The fintech M&A transaction value of $50bn from 189 transactions achieved in the first half of 2018 was not replicated, however, as second half activity cooled, recording 160 transactions and a total disclosed transaction value just shy of $13bn. The decrease in value was largely due to the absence of disclosed blockbuster deals.

The research says that trailing multiples on a 30-month median basis continued their upward movement. Revenue multiples reached 3.0x, up from 2.9x in 1H 2019, while EBITDA multiples reached 15.3x, up from 15.0x in 1H2018."

“In the latter half of 2018 the UK continued to lead the way in fintech in Europe, breeding a new generation of innovators with record levels of investment following the lead of new unicorns like Monzo and Revolut," added Simnett. 

"Retail banking has led the charge in upgrading digital consumer experiences while incorporating fintech into core banking products, whereas investment banks have been more focused on integrating robo-advisory services.”

Research highlights include pointers towards the rising adoption biometric technologies among consumers with smartphone fingerprint authentication and facial recognition for payments featuring prominently.

While AI continues to show promise as firms adopt algorithms and advanced modelling techniques for investment decisions, change is more likely to resemble a gradual process than a leap into new data sources and methods, noted Simnett.

"Winners in fintech are primarily emerging at a regional rather than global level, in similar fashion to traditional retail banking, reflecting differing business and regulatory conditions," he added.

“Going forward it is anticipated that the largest fintech firms will soon realise value through IPO in 2019. 

"Meanwhile, most start-ups that have grown large enough to gain traction, attract a strong customer base and produce a profitable balance sheet, will remain small enough to be acquired by fintech and traditional incumbents leading to an ongoing process of consolidation and M&A.”

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