Blockchain a 'catalytic force' in soaring fintech market

Posted Aug 21, 2017 by James Walker
Blockchain technology is propelling the fintech space to new highs as more investors get on board. The rising increase in fintech and the applications of the blockchain is leading to "exponential" increases in pilot projects, according to a new report.
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KPMG covered the global fintech trends as part of its quarterly "The Pulse of Fintech" analysis. In the report, the firm said blockchain is attracting "significant attention" from a variety of fintech investors. These include traditional VC groups as well as corporations.
Investing in the blockchain is now starting to pay off. Last year, the amount of capital invested in blockchain companies more than doubled, up from $153 million in 2015 to $367 million. 66 deals were closed. This year, the blockchain is still growing steadily and is expected to meet or exceed last year's records. To the second quarter of 2017, 31 deals worth $133 million had been closed.
This suggests the first quarter of the year was slower than in 2016. According to KPMG, this can be attributed to a rush of uncertainty around the long-term possibilities of blockchain tech. Having demonstrated the blockchain's a technically viable fintech solution, participants now need to start creating value from their prototypes.
"In the rush to prove the technical capabilities of blockchain prototypes, companies have neglected the need to show how blockchain can create value," said Eamonn Maguire, Managing Director of KPMG U.S. and Global Head of Digital Ledger Services at KPMG International. "For long-term success, there needs to be an emphasis on demonstrating how a blockchain production system can enable transformative change, whether by lowering costs, lowering capital or improving the customer experience."
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Particularly in the U.S., blockchain technology is growing alongside banking automation systems and cloud services. KPMG said that software-as-a-service (SaaS) products will become more popular with investors in the coming months and years. Financial regulators are only just gaining familiarity with the features, advantages and possible concerns of SaaS applications. As their use is approved, they will become more prevalent.
Blockchain's also expected to succeed in Europe where it's powering new cybersecurity solutions. KPMG warned that blockchain's yet to get established in other geographic areas though, including many Asian regions. India has attracted a lot of attention to the technology but is yet to offer a commercial product that's built on top of it.
Globally, the fintech market has risen to a four-quarter high. During the second quarter of the year, quarter-over-quarter investment more than doubled. $8.4 billion was devoted to 293 deals spanning countries across the world. KPMG said more large deals can be expected over the next few quarters as new investors and established tech firms seek to partner with each other.