Fintech Investment Falls To Lowest Level Since 2017

Global fintech investment dropped to $95.6 billion across 4,639 deals last year, reaching its lowest level since 2017, according to KPMG’s latest Pulse of Fintech report. KPMG said investors faced tough economic times and problems in different parts of the world, leading to less funding during the year.

According to the update, total funding in the fintech sector reduced from $51.7 billion in the first half of last year to $43.9 billion in the second half. However, there was an increase in the last quarter, where investment grew to $25.9 billion from $18 billion in the third quarter. This growth suggested that the market could be finding some balance again.

Investors In The Fintech Industries Face Difficulties

Karim Haji, Global Head of Financial Services at KPMG International, said this year has been tough for most individuals in the fintech industry. He said many investors avoided large deals, even though those deals have always been important for fintech funding.

According to the update, last year’s report showed that fintech investments had already dropped to $113.7 billion, the lowest level in a long time. The latest numbers showed an even sharper decline, highlighting the growing challenges in the market.

The Americas stayed the top region for fintech investment, bringing in $63.8 billion across 2,267 deals. The United States added $50.7 billion to this amount. The EMEA region came next with $20.3 billion from 1,465 deals, while the Asia-Pacific region recorded $11.4 billion across 896 transactions.

Roberto Napolitano, Chief Marketing Officer at Innovate Finance, said the United Kingdom received more fintech funding than the rest of Europe combined. He said the UK holds a strong position, but it is not clear how the market will change in 2025.

A report from Dealroom and HSBC last year showed that fintech received the most funding in the UK. It revealed that companies like Monzo and Flagstone secured £340 million and £108 million in investments, respectively.

The Fintech Payment Sector Reports $31 Billion In Funding

KPMG said the payments sector stayed the strongest, bringing in $31 billion in funding. Digital assets and currencies followed with $9.1 billion, while regtech received $7.4 billion. This showed that investors kept supporting well-known payment services while also showing interest in new financial technologies.

According to the update, many trends are shaping fintech investment this year. Interest in artificial intelligence is growing, especially in keeping online data safe. Digital assets and tokenization are also getting more attention. Payment technologies are still important.

Anton Ruddenklau, Leader of Global Innovation and Fintech at KPMG International, said artificial intelligence could have a stronger role in fintech investment. He said AI is still new, but its use in financial technology is expected to grow.

Even though overall investment dropped, some signs of recovery appeared. Mergers and acquisitions increased in the final months of last year, and venture capital funding rose. Experts believe the market could get better this year as interest rates go down.