Cascade Commentary

UK tops US for investment into FinTech as Banks embrace technology

Global investment into FinTech (as measured by total venture capital (VC), private equity (PE) and merger and acquisition (M&A) activity) totalled $57.9 billion in the first half of 2018 across 875 deals, says KPMG in their annual Pulse of FinTech report. Two deals led the way in the $12.9 billion acquisition of WorldPay by Vantiv and the $14 billion VC funding round raised by Ant Financial.

Investors this year have focussed on a broader range of technologies including Artificial Intelligence (AI), Robotic Process Automation (RPA), InsurTech and RegTech, alongside a broader diversity of investors as large insurance companies, corporates and mid-size banks have recognised the need to embrace technology.

While technology has pervaded the public's lives from booking apps to social media, its take up in the Financial Services sector has been slow. For a long time, technology was used by banks and building societies as a cost efficiency exercise rather than as a tool to improve customer relations and customer experience.

We are now witnessing a growing harmony between Financial Services and FinTech, who are beginning to focus on the use of technology to improve customer outcomes rather than to drive down operational costs. PWC report that 77% of Financial Institutions will increase internal efforts to innovate with 82% expected to increase their partnerships with FinTech organisations in the next three to five years.

Banks and building societies are experiencing a paradigm shift in their role in society. Instead of being viewed as a provider, many are now reinventing their role as enablers. PWC write that more consumers will adopt nontraditional Financial Services providers, with personal finance and payment and money transfers at the top of the biggest banking activities to be taken outside of a traditional banking relationship.

The UK regulator is looking to improve outcomes across the entire sector and for cash savers, improving competition to increase rates for longstanding customers and ensure customers are treated fairly is a key priority.

Cascade offers clients a non-traditional way to save. Our active daily research has delivered millions of pounds of extra interest for our clients. We are excited at the growing trust and confidence in technology and will continue to focus on delivering excellent customer outcomes at the touch of a button.

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