The newest “Pulse of Fintech” report from KPMG Global has calculated the total investment amounts in fintech during 2020 across the globe. Investments through private equity, mergers & acquisitions, and venture capital have come to a $105 billion total across 2,861 deals. This figure is surprisingly lower than last year’s total investments at $168 billion.
It may not be as shocking when taking the broader uneasiness felt throughout the investment sector since the beginning of the pandemic into account. However, the market is already getting back into motion as there were already improvements in investing during the second half of 2020.
Many businesses struggled during the pandemic, but fintech was an industry that has thrived for the most part. With the pandemic, there was increasing demand for digital services from both consumers and businesses. E-commerce and payment technologies were especially sought after, leading to greater investment seen in the second half of the year.
In 2020, there had been $42.3 billion in venture capital investment, making it the second-highest level of this form of investment following a record year of 2018. Regionally, the US accounted for over 70 percent of global fintech funding, coming in at a total of $76 billion. Adversely, Asia-Pacific actually witnessed a drop with a 2020 total at $11.6 billion. This is a $5.2 billion decrease from 2019 levels.
The European fintech sector has received the greatest share of equity investments at over €30 billion in venture capital since the year 2014. Overall, investments for fintech undertakings have been quite uneven across the globe. Some regions witnessed significant decreases in funding while the markets of others have taken off.
KPMG’s report was also successful in determining fintech trends of 2020. A major trend was the increased demand for contactless banking and payments, leading to an acceleration in the adoption of digital financial technologies. For this reason, it is predicted that there will be a global rebound.
There are, however, some potential hindrances to the rebound. For example, Covid-19 flare-ups can prevent investment as witnessed with South Asian countries. In Europe, Brexit may also cause some disruptions as London was Europe’s biggest fintech hub. It is still unknown if London will hold its dominant position in the fintech market as it exits the EU.
KPMG’s global leader of payments, Chris Hadorn, has stated that the payment arena will be a focal point for investors. It is extremely likely that fintech funding will continue to be resilient well into the future. Looking back to the past, there were many fintech solutions created to help alleviate the 2007-09 financial crisis. Similarly, the pandemic will be cause for the creation of many new and innovative fintech solutions that will be attractive to investors.
Jones, Alexander. “Fintech Funding Trends During the Pandemic.” International Baker, 2 July 2021, https://internationalbanker.com/brokerage/fintech-funding-trends-during-the-pandemic/.