Record Investment meets the Rise of AI in Finance: A Handy Summary of 2018 Fintech
Wow, what a whirlwind of a year in Fintech. Just as we predicted, 2018 proved itself to be a massive year of growth for Fintech firms and emerging technologies, like Artificial Intelligence, alike. Once rather placid with few rippling trends, fintech has transformed finance into a dynamic market with innovative firms competing to raise the bar above one another. As consumers continue to have greater expectations for personalised services across other industries like electronics and retail, the realm of financial services has realised the lucrativeness of meeting these needs.
Let’s sift through 2018 in Fintech, together:
More money than ever in Fintech
We’ll begin with the rather large elephant in the room. This last month saw the largest-ever crowdfunding round for a Fintech startup, with Monzo reaching their goal of £20m in just 2 hours and 45 minutes when it opened its round to the public on the morning of December 5th. Over 36,000 investors forked out their wallets to ensure Monzo is now valued 40 times more than their initial value during their first raise in early 2016. What’s more, this follows October’s £85 million Series E round, led by General Catalyst and Accel, which made the digital mobile-only bank the latest UK start-up to achieve bonafide unicorn status.
Speaking of Fintech unicorns, there are now about 29 of them merrily strolling the fields of finance, at an aggregated USD $84.4 billion. Q2 gave birth to five new unicorns, with Ribbit Capital and QED Investors the most active fintech unicorn investor.
Overall investment across venture capital, private equity and mergers & acquisitions are markedly above 2017’s totals. In H1, global investment in fintech firms surpassed $57.9 billion, with $16.8 and $26 billion of this going to the Asian and European continents respectively. Moreover, global median venture deal size for late stage investment rose from 2017’s now paltry $14 million to a more reasonable $25 million this year.
This, in part, was driven by two monumental deals: the record-shattering $14 billion raise by Ant Financial in Q2 and Worldpay being acquired by Vantiv in Q1 for $12.9 billion. Outside of these two major outliers, the worldwide fintech market built some great momentum, as the geographic diversity of fintech investment expanded beyond expectations. The usual faces of the UK, USA, India and China aside, other nations like Japan, South Korea, Switzerland and France all saw outstanding fintech deals. Most notably, Brazil held the honour of introducing its native Nubank into the fintech unicorn club.
A broad array of companies spent big on emerging areas of innovation in finance, with artificial intelligence, machine learning and data analytics receiving particular attention from major fintech investors.
The rise of Artificial Intelligence in Financial Services
The growth and adoption of artificial intelligence in financial services throughout the year cannot be overstressed. AI has been quietly transforming the inner, core workings of banks, leading early major movers to service their AI applications to their competitors. This leads users to accelerate the program’s learning, and eventually flipping previous cost centres into future profitable divisions.
The fintech scene in UK is one of the fastest growing sectors in business, with multiple challenger banks emerging from the shadows of monolithic financial institutions. One example, OakNorth, has created its own AI application, entitled Acorn Machines, which employs data to empower lenders to offer finance to SMEs. Other startups, like ComplyAdvantage, demonstrate the utility of artificial intelligence in financial services, by providing banks with practical solutions for money laundering and trading applications.
Across the globe, artificial intelligence continues to make waves. The Monetary Authority of Singapore (MAS) formed a set of principles to guide the nation’s usage of artificial intelligence in finance. The principles promote fairness, ethics, accountability, and transparency (F.E.A.T) in the use of AI & Data Analytics (AIDA) across the finance sector. The FEAT Principles informs financial firms on the ethics when using AIDA.
Elsewhere, Beijing’s Tsinghua University partnered with the University of Hong Kong (HKU) to accelerate projects employing Artificial Intelligence, including those related to FinTech and environmental protection. The new initiative features collaboration between the Ministry of Science and Technology and Sensetime as they develop new AI applications. This follows China’s continued support for rapid innovation in technology across Hong Kong.
For some North American representation, Montreal impressively finds itself playing host to three new AI firms: QuantumBlack, WinningMinds, and BIOS, with 130 new jobs expected in the city. The trio find themselves in good company, with Montreal receiving almost CA$1.1 billion in AI investment since 2016 — according to Montreal International.
All this shows plenty has happened in 2018, and having a firm understanding of the concepts behind these moves is paramount to industry success.This is especially important with the close of 2018, as the turn of the New Year presents a wondrous opportunity to finally jump aboard the Artificial Intelligence movement.
Fortunately, CFTE has formed AI in Finance — a leading programme which allows participants to learn from senior industry leaders who hail from the large financial institutions, fast growing startups and regulatory agencies. Featuring 18 guest speakers and 5 senior lecturers, learners will understand how AI transforms finance. Designed for those novices or professionals who want to be part of this flourishing industry, and with no prerequisites, — join the AI revolution in Finance today!
