Challenger Banks Raise Record Sums With Europe The Prime Region

Challenger banks are raising record amounts of capital, according to research findings published by Fintech Global.

As the consultancy points out in its latest report – focused on the first three months of 2018 – challenger banks have been proliferating over the last few years, not just in the UK and Europe but around the world. And investment is flowing in. Fintech Global says investment in the sector totalled $745m in the first quarter –  67% of the amount raised across the whole of 2017.

Deal Numbers Rising

Deal numbers are also on the rise. According to Fintech Global, there were 35 transactions in 2017, compared with 21 in 2014.  And over the same period, the amount of capital invested rose sevenfold. The average deal size grew from $7m to $38m, an increase that is at least partly attributable to intense competition in the sector, which in turn has created a new requirement for investment.   

By Region

The strength of the UK fintech sector is reflected in the investment data. For instance. Atom Bank sits at the top of the funding league table from 2014 to Q1 2018 and Tandem and Oaknorth are also in top ten.  

When broken down by region, Europe is the biggest target for investment, with companies there receiving 57% of the total sum committed since 2014. Elsewhere, the US, Latin America and Asia attracted  21.9% 10.2% and 7.8% of the total respectively.

The sums raised do not necessarily track market traction. For instance, as the research points out,  Atom Bank is lagging some of its competitors in terms of user accounts, despite attracting heavy investment. However, the bank sees its capital raising activities as the key to building its position in the market.  


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