The global fintech sector drew USD 164.1 billion across 6,006 agreements in 2022, down from a high of USD 238.9 billion across 7,321 deals in 2021, a report showed on Friday, February 17.
According to KPMG's "Pulse of Fintech H2-2022" study, the payments area has continued to be the most attractive fintech sub-sector globally, bringing in a total of USD 53.1 billion in investment.
The dramatic decline in fintech investment from USD 119.2 billion to USD 44.9 billion between the first and second halves of 2022 demonstrates the rapidly shifting market dynamics even more clearly.
"The difference between the first half of the year and the second highlights the rapid shift in investor sentiment amidst a variety of challenges," said Anton Ruddenklau, Global Head of Financial Services Innovation and Fintech, KPMG International. "High inflation and rising interest rates, the lack of IPO exits, the downward pressure on valuations, and, of course, the turbulence in the crypto space. The news wasn't entirely bad, either. Significant investment was made in regulatory technologies in especially in 2022" he said.
With an investment of USD 68.6 billion in 2022, the Americas will continue to dominate fintech investment globally (the US accounted for USD 61.6 billion of this total).
According to the survey, the EMEA region drew USD 44.9 billion while the Asia-Pacific region only slightly increased its previous record of USD 50.5 billion in 2022. Blockchain and cryptocurrency investments decreased from USD 30 billion in 2021 to USD 23.1 billion in 2022.
Due to increased scrutiny in the space, the fall in the second half of the year was very severe. "Valuations will continue to be challenging for a while as long as interest rates continue to rise. While investors wait to see if prices decline even more, many of the largest potential M&A transactions will likely be put on hold as a result "Ruddenklau added.
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