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How Are European Banks Investing in Fintech?

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June 19, 2017

CB Insights’ research in European banks investment in fintech makes an interesting read. The research company analysed private market fintech investments by assets under management all the way from 2012 to the current year and noticed banks are keen on fintech investments. With the current rate of investing, funding in European-based fintech firms might surpass $2.6 billion this year.

 

Top banks to invest in fintech

 

While most European banks have been keen to invest in fintech, there are certain banks that are leading the march. Spain-based Santander takes the top spot in terms of fintech investment activity. In the last five quarters, Santander has taken the top spot by investing in a variety of companies through its venture arm Santander InnoVentures. Santander’s investments include lending firm Kabbage and wealth management firm SIGFIG, for example. Santander’s involvement in the SME lender Kabbage’s Series E funding was the largest funding round for the bank.

 

Santander was followed by UBS and Deutsche Bank, with both investing in regulatory technology firm ACADIASOFT. The three banks made the most investments, investing in a range of fintech technologies.

 

However, a few European banks chose not to make fintech investments during the last five quarters. CB Insights’ reporting shows French banks BPCE and Credit Mutuel and UK-based bank Lloyds made no equity investments in fintech startups during this time. Furthermore, Crédit Agricole, RBS and UniCredit only participated in a single deal.

 

The top fintech sectors

 

Blockchain technology is, clearly, where investor interest is currently at its strongest. Nearly every European bank invested in a European company, with the exception of Crédit Agricole. Interestingly, most banks also chose to invest in the same blockchain firm. R3 received an investment from every bank that made fintech investments except Crédit Agricole. The startup has recently raised $107 million in investments.

 

The other two popular sectors included financial services software and regulatory technology. In terms of regulatory technology startups, ACADIASOFT was able to attract investments from a number of European banks.

 

Santander and UBS made the most wide-ranging investments. Both banks invested in six different fintech sectors. Santander’s investment included blockchain, wealth management, financial services software, lending, payments & settlement, and regulatory technology. UBS also invested in blockchain, wealth management, financial services software, lending, and regulatory technology. But the bank also made an investment in data analytics firm Visible Alpha.

 

European fintech spikes in Q1

 

The interesting thing about CB Insights’ most recent findings is the spike in European fintech investment. During the first quarter, the region witnessed 73 deals with the deal value of nearly $700 million. However, the total deal number still dragged behind the US, which witnessed 90 deals during Q1 in 2017. However, the US deal value and volume dropped during the first quarter. At the current rate, the US fintech deal activity would drop below the 2013 levels.

 

In terms of US and global fintech investment, banks’ interest is on blockchain technology. In the US, all ten major banks have invested in the sector, with many of them putting their faith in R3.

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