We may be halfway through 2015, but analysts are still peeking back at 2014 to examine trends in the world of financial technology investment. According to a new report, 2014 was a massively lucrative year for investment in the space.
Accenture and Partnership Fund for New York City released the results of their joint report on Thursday (June 25) and revealed that FinTech investment nearly tripled in 2014, reaching a valuation of $9.89 billion in the U.S. — a 191 percent increase from the year prior.
“This past year marked a paradigm shift in how financial services companies approach and embrace FinTech innovation, as they recognize the vast potential that this strong network provides,” said Accenture Strategy Capital Markets Managing Director Robert Gach.
New York City alone saw a new high of $768 million in FinTech investments last year. While across the nation investors pumped most of their funds into payments innovation, New York City, considered a global financial hub, actually saw a decrease in payments-related FinTech deals.
Still, the city saw a 32 percent increase in FinTech deals. Analysts are eyeing an expected uptick in investments into wealth management and FinTech markets in the future.
“For FinTech entrepreneurs, New York provides key advantages that no other city can match — notably close access to potential customers and a deep talent pool of individuals with an intricate understanding of the financial services industry,” said Partnership Fund for New York City President and CEO Maria Gotsch, who also coauthored the report.
Payments was the most popular area for FinTech investment last year, representing 29 percent of deals. Other popular investment areas for the nation included wealth management, lending and trading technologies. Lending investments saw the second-most action, accounting for 16 percent of all backing in 2014, according to reports.
Looking ahead, analysts said cloud technology will become an especially important driver behind FinTech innovation as banks explore Big Data storage and analysis. Incoming blockchain investment, too, will fuel evolution in the FinTech space for banks, clearinghouses and credit card firms, the report found.
According to Gach, the investment in FinTech is sure to yield tangible improvements in the industry. “An increasing number of banks and insurers are investing in connecting into the FinTech ecosystem, whether through accelerator or incubator labs, venture investments or in other ways,” he said. “We believe this explosive growth in FinTech will help drive innovation within some of the world’s largest financial institutions.”