The Pulse of FinTech Q3 2017, Global analysis of investment in FinTech


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KPMG sees AI, insurtech, regtech and blockchain as ‘hot areas’ of investment

Artificial Intelligence (AI), insurtech, regtech, and blockchain are poised to remain hot areas of investment, according to KPMG’s Q3 ’17 Pulse of Fintech report.

“We see a lot of optimism in the U.S. Fintech market – from the maturation and adoption of early stage technologies like Big Data, Artificial Intelligence and IoT to the rapid acceleration of others, such as Insurtech, Robo-advisory, Blockchain and Regtech,” said Anthony Rjeily, leader for Financial Services’ Digital and Fintech practice in the U.S. “Looking ahead, the fintech sector is expected to evolve rapidly, including both mature fintechs and large technology players diversifying into adjacent services.”

The report noted that blockchain development is evolving at a rapid pace – moving from the experimental to developing robust prototypes. It also said that a number of companies could be in the process of developing production blockchain systems.

The authors also highlighted that financial institutions are actively participating in blockchain syndicates and consortia. To that end, the report said that R3 blockchain consortium continues to be the largest of its kind and gave a special call-out to B3i – the insurance industry’s largest blockchain syndicate —which is growing rapidly and adding participants every quarter.

This year, the global venture investment in blockchain companies up to the end of third quarter stands at $171 million, according to the report. This figure, however, excludes the $107 million raised by R3 as this amount only makes up the first two tranches of the funding round. The third and final tranche is expected later this year.

Furthermore, the report also noted the recent explosion of interest in Initial Coin Offerings (ICOs) as an alternative means of raising funding.

“Funding raised through ICOs rose exponentially over a 4-month period earlier in 2017 — from $103 million in April to $574 million in July. With the rapid rise of ICOs, however, has come an increasing focus from regulators,” it said, and underscored the recent regulatory efforts in this space by a number of countries, including China’s ban on all ICO-related activities.