Banks are increasingly betting on fintech to advance their strategic goals. From small business solutions to real estate tech, we visualize where top US banks have concentrated their investments across the space.
Since 2018, banks have backed a record number of deals in the fintech space. And despite the economic uncertainty surrounding the Covid-19 pandemic, the largest US banks continue to make these strategic investments.
Below, we look at where US banks are investing in fintech — and identify some of the motivations behind their bids.
We define US banks as regulated banks with headquarters in the United States. Our analysis only includes equity investments made to private fintech companies 2010 – 2020. Categories are not mutually exclusive, and companies are categorized according to their primary focus.
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Since 2010, private companies in the capital markets category have received the most individual investments from banks out of any fintech category. This category is followed by wealth & asset management, then small- and medium-sized business solutions.
US banks generally get involved in fintech rounds for two main reasons: the potential for high returns, and to form strategic partnerships.
In the first case, banks, corporate venture capital groups, and strategic bank funds will invest in a startup for the purpose of future returns, as well as to gain exposure to emerging sub-industries.
In the second case, a bank will invest strategically, partnering with a fintech company to further its own internal goals. For example, in Q3’20, JPMorgan Chase (JPM) participated in Taulia’s $60M strategic funding round. On top of the investment, JPM announced a partnership with Taulia to create a trade finance solution for corporate clients. Most recently, JPM led a financing consortium in a $6B funding round to Taulia in March 2021.
Another example is Capital One’s 2018 investment in United Income, a retirement planning service and digital wealth platform. After participating in a Series A round in August 2018, Capital One acquired United Income a year later to enhance the bank’s retirement planning and digital wealth capabilities.
Note: Companies/rounds with multiple top bank backers may be double counted in their category.
Several banks may invest together in the same round, especially when the target is mutually beneficial for all involved. This is more often the case when the fintech company is building infrastructure — such as a capital markets data network or exchange — that inherently accrues value with more participants involved.
For instance, Citigroup, Goldman Sachs, and JPM all backed CurveGlobal’s $28M Series B in 2018. CurveGlobal is an interest rate derivatives venture between London Stock Exchange Group and a number of the largest global banks.
Similarly, regtech company AccessFintech raised a $20M Series B in Q4’20 with follow-on investments from participating investors Goldman Sachs, JPM, and Citigroup. Alongside Credit Suisse, these banks had previously partnered on a collaboration workflow that uses AccessFintech’s network to improve the settlements process.
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