Global investment in financial technology (fintech) ventures reached another all-time high in 2017, buoyed by a surge in funding for start-ups in the United States, United Kingdom and India, according to Accenture analysis of data from CB Insights, a global venture-finance data and analytics firm. Fintech financing rose 18 per cent in 2017, to $27.4 billion, with the value of deals in the US. jumping 31 per cent, to $11.3 billion. Deal values almost quadrupled in the UK, to $3.4 billion, and soared nearly fivefold in India, to $2.4 billion. The number of fintech deals also rose sharply, from just over 1,800 in 2016 to nearly 2,700 in 2017, underscoring continued appetite from investors scouring the globe for innovation in insurance, banking and capital markets start-ups.
India’s digital payments start-up Paytm received $1.4 billion in venture capital, helping drive fintech fundraising activity to nearly five times the 2016 levels. The number of fintech deals in India increased 65 per cent over 2016. This was largely spurred by the central bank’s demonetisation initiative geared to combat corruption by banning high-value bank notes, which prompted millions to shift to mobile payments and other cashless service providers such as Paytm.
Total global investment in fintech ventures between 2010 and 2017 reached US$97.7 billion, with US. start-ups accounting for more than half (54 per cent) of all investments. The volume of fintech deals globally within that time frame grew at a compound annual rate of 35 percent, with total funding growing at a compound annual rate of 47 percent. “Much of the growth, particularly in the US. and UK, has been driven by big new investment flows from China, Russia, the Middle East and other emerging economies,” said Julian Skan, senior managing director in Accenture’s financial services practice. “In addition, we saw more and more business to business fintech models proving out at the banks, coupled with larger and later-stage investments as the fintech world scales up. Also fueling growth was the rapid rise of “insurtech” ventures where traditional carriers see opportunities. India’s boom was driven by strong demand for cashless services following the country’s ‘demonetisation’ events.”
Kabbage Inc, a US online lender for small businesses, alone raised $900 million in three separate rounds in 2017. Online lender Social Finance Inc, also known as SoFi, raised $500 million in February, and LendingPoint raised $500 million from a credit transaction in September. As start-ups grow and their businesses mature, funding rounds have increased in size, while some companies have opted to use credit facilities to speed up their expansion.
Science, tech, engineering and math sector faces talent crunch
The average level of shortage of skilled talent in India has increased from 6 per cent in January 2014 to 12 per cent in January 2018 in the science, technology, engineering and mathematics (STEM) sector, according to job search portal Indeed. Home to a record number of engineering colleges, India produces over 1 million graduates annually. However, despite there being ample talent, India continues to face the issue of jobs and skills mismatch. With 78 million fresh graduates in 2016 alone, India had the highest number of graduates worldwide in 2016, of which 2.6 million were STEM graduates. This puts India in a position to outstrip the US in terms of STEM graduates produced annually, given that it leads by a margin of over 2.5 million. Initiatives such as Prime Minister’s Research Fellowship is expected to help serve as a great opportunity to create the right talent pool.
Indeed’s data also indicates that job seekers in the age group of 21-25-year-olds show 12 per cent more interest in STEM jobs than in any other sector. The leading sectors hiring STEM talent include information technology, banking and financial services. The top job roles these companies offer include software engineer, web developer, business analyst, software architect and SAP consultant. The top 10 companies for charting out a career in STEM are Capgemini, Wipro Ltd., JP Morgan Chase, Oracle, HCL Technologies, IBM, Magna Infotech, PWC, Barclays, Citi Bank.