Global investment in financial-technology (fintech) ventures tripled from $4.05bn in 2013 to $12.2bn in 2014, according to a report by consultancy Accenture.
The research found that while the US still captures the lion’s share of fintech investment, Europe experienced the highest growth rate, with an increase of 215% to $1.48bn in 2014.
Notably, the UK and Ireland accounted for more than two-fifths (42%) of the European total.
In the rest of Europe, the regions that experienced the most significant levels of investment in 2014 were the Nordic countries ($345m), the Netherlands ($306m) and Germany ($82m).
“The massive investment in fintech shows that the digital revolution is well advanced in financial services, and it is both a threat and an opportunity for banks,” said Julian Skan, Accenture managing director overseeing the FinTech Innovation Lab London.
He added: “Fintech is empowering new competitors and start-ups to move into parts of the banking business but, paradoxically, it is also helping banks to create better, more convenient products and services for their clients. It is also leading to increased cooperation between traditional banks and innovative start-ups and technology businesses in a way that can result in totally new business models and revenue streams.”
Worryingly, the report, which is entitled The Future of Fintech and Banking, suggests that many established banks are not well equipped to deal with the digital revolution.
According to a survey of 25 senior banking executives involved in technology innovation, 72% of the respondents feel their banks have a fragmented or opportunistic approach to dealing with digital innovation, and 40% think the time it takes their organisation to deploy new technology is too slow, either negatively impacting their ability to realise value or providing no net benefit at all.
The vast majority also believes that their organisation lacks the skills and culture needed to succeed in the digital age.
Overall, 44% of the executives surveyed claim that their banks do not invest enough in innovative technologies. And while all of the respondents believe that legacy technology presents an issue to their organisations, just half say their bank has a strategic approach to replacing its old technology.
Despite these challenges, the report also suggests that many banks feel confident about the future. Three-fifths of survey respondents believe that banks and new competitors will coexist by providing differentiated offerings, or that the established banks will acquire the new players.
The FinTech Innovation Lab London, launched by Accenture in 2012, is a collaboration between Accenture and leading financial institutions. It is designed to nurture early-stage companies from the UK, Europe and elsewhere that are developing new technologies for the financial services sector.