How AI will impact financial services & UK leads the way in European WealthTech

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What will the impact of AI be on financial services? - The capabilities of artificial intelligence (AI) are evolving rapidly and with them brings a sea of change for how financial institutions can support their clients. Most importantly, it is allowing them to offer greater personalisation. 

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Research highlight

UK remains a leader in the European WealthTech market as funding halved in H1

Key European WealthTech investment stats in H1 2024:

• European WealthTech investments halved in H1 YoY
• UK companies continued to dominate the European WealthTech space completing 27% of all deals in the region during the first half of the year
• Abound, a leading credit technology company, secured the largest European WealthTech deal for the first half of the year with a funding round of $1bn

In H1 2024, the European WealthTech industry experienced a sharp decline in both deal activity and funding. The region recorded 293 funding rounds, representing a 63% drop from the 788 deals completed in H1 2023. Similarly, European WealthTech companies raised $4.8bn during the same period, a significant 51% decrease from the $9.8bn raised in H1 2023. This substantial reduction in both deal volume and funding highlights a broader slowdown in the sector, with investor activity contracting considerably compared to the previous year.

The United Kingdom remained the most active WealthTech market in Europe, with companies in the country completing 80 deals (27% share) in H1 2024. However, this marked a dramatic 64% decrease from the 220 deals recorded in H1 2023. Despite the fall in deal numbers, the UK's percentage share of activity remained stable, underscoring its continued leadership in the region. Germany followed with 40 deals (14% share), down from 98 deals in H1 2023, while France completed 31 deals (11% share), compared to 103 deals in the same period last year. Despite these steep declines, the UK, Germany, and France retained their positions as the top three most active countries, reflecting their ongoing influence in the European WealthTech landscape despite the broader slowdown.

Abound, a leading London-based credit technology company using Open Banking and artificial intelligence to offer more affordable loans, has secured the biggest WealthTech deal in the UK for H1 2024 with a new financing round of $1bn. This significant funding follows Abound's rapid growth and achievement of profitability just three years after its launch. The new capital includes a multi-year asset-backed debt financing arrangement from Citi, based on loan originations, and a Series B equity round led by Silicon Valley's GSR Ventures. Abound has issued over $400m in loans to date and plans to double its workforce to 130 employees this year. The company’s AI-powered technology, Render, analyses customers’ bank transaction data to tailor loan repayment plans based on individual financial situations, contrasting with traditional credit checks that rely on broad statistical averages. With over 15m people in the UK struggling to borrow for unexpected costs, Abound aims to revolutionize credit decision-making, promoting financial inclusion by making loans accessible at more affordable rates. As a pioneer in leveraging Open Banking and AI in consumer credit decisioning, Abound is already partnering with banks and lenders across Europe to support the AI transition in the lending industry.

Weekly FinTech deal roundup

Quiet week for FinTech deals with only 13 recorded – Despite $736m being raised across all funding rounds recorded by FinTech Global this week, there were only 13 key deals reported. Read the full story here.

InsurTech news

• How Peak3 has scaled the InsurTech landscape - The insurance industry has undergone a significant transformation over the past few years, largely driven by the hastening adoption of technology and vastly evolving consumer expectations. Among the key players in this evolution is Peak3, a leading provider of SaaS solutions tailored specifically for the insurance sector. With a strong commitment to innovation and a focus on digital transformation, Peak3 is redefining the landscape of insurance technology. Read the full story here.
• Akur8 and ICPEI partner to revolutionise insurance pricing in Canada - Akur8, a next-generation insurance pricing and reserving platform powered by Transparent AI, has partnered with the Insurance Company of Prince Edward Island (ICPEI), a leading provider of personal and business insurance across Canada. Read the full story here.
• hyperexponential introduces innovative reinsurance pricing model - hyperexponential, a global pricing platform provider for re/insurers, has introduced its first templated reinsurance pricing model, designed for treaty reinsurance, including Excess of Loss (XoL) agreements. Read the full story here.

WealthTech news

• Tietoevry and Lowell extend their SaaS alliance for enhanced credit management - Lowell has reaffirmed its commitment to Tietoevry Banking by extending its partnership with a three-year contract for Collection Suite Nova, delivered as SaaS from Tietoevry’s private cloud. Read the full story here.
• Revolutionize your WealthTech platform with ByAllAccounts’ Tax Lot Data feature - ByAllAccounts is transforming the landscape of WealthTech with the introduction of its open and closed tax lots data. Read the full story here.
• DriveWealth enhances broker-dealer integrations for global trading efficiency - DriveWealth, a pioneer in financial technology with its Brokerage-as-a-Service offerings, has unveiled comprehensive integrations with several leading execution management system (EMS) platforms, including Bloomberg EMSX, LSEG Autex, and TRAFiX. Read the full story here.

RegTech news

• The natural tension of compliance and technology in financial institutions - While technology is essential for modern compliance programs, it can often be a source of natural tension for compliance. Read the full story here.
• Unlocking AML capabilities: How graph databases revolutionise financial crime detection - Graph databases and network analysis have become pivotal in the field of Anti-Money Laundering (AML), offering a sophisticated approach to understanding and disrupting financial networks. Unlike traditional relational databases that structure data linearly, graph databases excel in depicting the complex relationships between diverse entities. This ability is crucial in today’s landscape where financial criminals deploy intricate schemes to mask illicit activities. Read the full story here.
• Harnessing AI and customer success to tackle financial crime - Nicole Baxby, the Vice President of Customer Success at Quantifind, recently shared her personal journey and significant achievements in the field of risk management and customer success. Baxby’s experience underscores the importance of technology, collaboration, and a customer-focused approach in combating financial crime. Read the full story here.

CyberTech news

• How AI is revolutionising third-party risk management: Four key accelerations - In the evolving landscape of global business, third-party risk management (TPRM) remains a concern for teams across IT, security, boards, and regulatory bodies. Read the full story here.
• Why DevSecOps is essential for securing Agile and DevOps environments - Security remains a critical concern within the software industry. Since 2000, a staggering number of individuals—over 3.5 billion—have had their personal data compromised due to security breaches. The complexity and breadth of software applications today only widen the potential for vulnerabilities, highlighting the urgency for robust security measures. Read the full story here.
• Stoïk secures $27m in Series B to bolster cyber insurance for European SMEs - Stoïk, a French InsurTech startup, recently secured Series B funding of €25m ($27m).Read the full story here.

ESG FinTech news

• How to define organisational boundaries for CSRD compliance - The CSRD aims to elevate and standardise sustainability disclosures for companies both within and outside the EU that operate across Europe. Read the full story here.
• ESG Book links with Zfolio to transform financed emissions management - ESG Book, the world’s leading provider of sustainability-related data for public and private companies, has joined forces with Zfolio. Read the full story here.
• Governance rises as key concern in ESG investment decisions - Investors’ enthusiasm for ESG factors in their investment decisions has shown a marked decrease, according to the latest ESG Attitudes Tracker from the Association of Investment Companies. Read the full story here.

Other FinTech news

• How does the gig economy shape innovations in RegTech? - AI has profoundly influenced various industries, particularly transforming the gig economy through platforms like Uber and Deliveroo. Read the full story here.
• How FIs are tackling Gen AI challenges: Key insights from Theta Lake’s 2024 report - Theta Lake, a leader in DCGA, has unveiled its sixth annual report, revealing significant insights into the adoption of Gen AI  in the financial services sector. Read the full story here.
• Exploring the impact of AI on health outcomes with Tietoevry Care - Public and social care systems across many countries are currently strained, grappling with ageing populations and a parallel increase in the demand for health services. These challenges are compounded by stagnant public healthcare budgets and a shortage of skilled healthcare professionals. Read the full story here.