Global Scenario of FinTech

In 2016 the FinTech industry has encountered a major drop globally, demonstrating the level of
uncertainty present in the investment market. The consequences of Brexit in Europe, presidential
election in USA and downshift in China, kept the investors at a cautious and skeptical state
throughout the year. The industry encountered a major slump in terms of funding, decreasing to a
level of $25 billion from $47 billion in 2015. The total number of M&A deals also reduced to $34
billion to $11 billion around the year.

Despite an increase in the dollar investment from $12.7 to $13.6 billion, the number of deal activity
has dropped to 840 from 940. The comprehensive amount of investment made in FinTech dropped
to $24.7 billion in 2016 from $46.7 billion. Overall, the global investment made in FinTech
companies scored $24.7 billion from 1076 deals. This magnifying amount of investment has
provoked governments into thinking about the FinTech innovation and align their objectives and
regulations accordingly, in order to bring change to the performance level of the financial
companies and to the economy as a whole.
Investment by FinTech Segments

Banking or Lending has been the dominant segment when it comes to the number of companies
raising funds (29% of companies that raised funds belonged to this segment). However, the
segment of Payments/Loyalty/E-Commerce is the one where the total funds raised value is
highest. Companies categorized in this market segment have raised 39% of total funds raised by
the entire Fintech industry in 2016.

M&A, PE, IPOs and VC deals

When analyzing the structure of financing deals, the increase in venture capital activity is noticeable in comparison
to 2015. According to KPMG, M&A and PE FinTech deals dropped considerably in 2016, while the venture capital
investments reached $13.6 billion, even more than $12.7 billion in 2015. The increase in VC investments occurred
despite the decrease in number of deals. The reasons for such a boost are mostly three gigantic financing rounds in
China. The funding round to Ant Financial that occurred in second quarter last year was $4,5 billion heavy. Besides
Ant, two more historic financing rounds, each over $1bn, significantly increased investment numbers in China: Luf
ax.com $1,2 billion and JD finance $1 billion. After these three giant investment shots, China outpaced the US
for the first time with $7,7 billion in total value of deals (28 in total), with an 84% increase in comparison to 2015
($4,2 billion). Except Markits $5,5 billion merger with HIS, there were no significant IPOs in 2016, either. The
expectations are that the trend will pick up in 2017, as we have more mature companies in the market. The most
active FinTech investor was fund and accelerator 500 Startups with 39 investments. In June, they announced raising
a $25million separate Fintech fund for investing in early stage companies globally.