Fintech funding has reached its lowest levels since 2017
Declines have spared virtually no region or industry.
The latest Pulse of Fintech report by KPMG highlighted a notable downturn in fintech investment in 2023. Global fintech investment
fell to $113.7 billion in 2023, a significant drop from $196.3 billion in 2022. The number of
fintech deals also declined to 4,547, marking the lowest level since 2017.
Fintech Investment Drops
in 2023 amid Global Challenges
As
investment sentiment cooled significantly, global funding for fintech reached
its lowest point in five years, totaling $113.7 billion through 4,547
transactions in 2023. This pullback was influenced by concerns over high
interest rates that persisted, geopolitical tensions in Ukraine and the Middle
East, declining fintech valuations, and a challenging exit landscape.
“2023 was a
difficult year for the fintech market globally, with both total fintech
investments,” commented Anton Ruddenklau, the Global Head of Fintech and
Innovation at KPMG. “The year-over-year decline in fintech investment occurred
across all key regions.”
Global
fintech investment experienced a slight uptick between the first and second
halves of the year, climbing from $55.5 billion in H1 2023 to $58.2 billion in
H2. This increase was fueled by six blockbuster deals exceeding $1 billion each.
Notable
transactions included the acquisition of US-based Black Knight by
Intercontinental Exchange for $11.7 billion, the acquisition of US-based Adenza by
Nasdaq for $10.5 billion, a private equity raise of $6.9 billion by UK-based Finastra, the buyout of US-based Avantax by Cetera for $1.2
billion, the venture capital
raise by California-based Generate for $1 billion, and the acquisition of
Brazil-based Pismo by Visa for $1 billion.
Regional and Sector Trends
This drop
occurred across all major regions, with the steepest declines in Asia-Pacific
and Europe. Investment in the Americas showed the most resilience but still
fell 18% year-over-year. The US continued to lead, accounting for nearly
two-thirds of all fintech funding, securing $78.3 billion over 2,136
transactions.
These figures are confirmed by a separate report from Innovate Finance, which was presented earlier this year. It claims that the United Arab Emirates has managed to break free from the negative trend, with fintech funding nearly doubling, growing 92%.
Payments
remained the top sector by deal volume, despite funding falling 64% to $20.7
billion. Proptech and insurtech were rare bright spots, being the only
subsectors seeing rising investment.
“While the
investment numbers are soft now — due to broader market conditions — the next
year could be quite exciting for innovation in the fintech space,” added Karim
Haji, the Global Head of Financial Services at KPMG.
However, global
venture capital (VC) investment in fintech witnessed a significant decline
year-over-year and between the first and second halves of 2023. The total VC
investment plummeted from $88.8 billion in 2022 to $46.3 billion in 2023,
marking a substantial decrease. Similarly, the VC investment between H1 ($27.5
billion) and H2 ($18.8 billion) also experienced a sharp drop. Notably,
investment in later-stage deals decreased drastically from $37.4 billion in
2022 to $14.1 billion in 2023.
Fintech
investors grew more cautious amidst global instability, inflation concerns, and
doubts about valuations and exit opportunities. They increasingly focused on
profitability and sustainability, shunning risky bets. Partnerships and B2B
solutions attracted interest as did AI and embedded finance.
Murky Forecasts
Investment
is expected to stay soft in early 2024 before recovering later in the year as
rates potentially fall. M&A activity may also pick up as investors buy
distressed assets.
The report
highlighted one outlier to the trends: seed and early-stage funding hit record
highs in terms of deal numbers, indicating investors are still keen to test new
fintech models. Additionally, the report mentioned that AI would play an increasingly significant role in the fintech industry. This was also the topic of one of the recent panels during the Finance Magnates London Summit.
As the
report concluded, enhancing profitability and sustainability will be key for
fintech firms to thrive long-term amidst the current challenges.
The latest Pulse of Fintech report by KPMG highlighted a notable downturn in fintech investment in 2023. Global fintech investment
fell to $113.7 billion in 2023, a significant drop from $196.3 billion in 2022. The number of
fintech deals also declined to 4,547, marking the lowest level since 2017.
Fintech Investment Drops
in 2023 amid Global Challenges
As
investment sentiment cooled significantly, global funding for fintech reached
its lowest point in five years, totaling $113.7 billion through 4,547
transactions in 2023. This pullback was influenced by concerns over high
interest rates that persisted, geopolitical tensions in Ukraine and the Middle
East, declining fintech valuations, and a challenging exit landscape.
“2023 was a
difficult year for the fintech market globally, with both total fintech
investments,” commented Anton Ruddenklau, the Global Head of Fintech and
Innovation at KPMG. “The year-over-year decline in fintech investment occurred
across all key regions.”
Global
fintech investment experienced a slight uptick between the first and second
halves of the year, climbing from $55.5 billion in H1 2023 to $58.2 billion in
H2. This increase was fueled by six blockbuster deals exceeding $1 billion each.
Notable
transactions included the acquisition of US-based Black Knight by
Intercontinental Exchange for $11.7 billion, the acquisition of US-based Adenza by
Nasdaq for $10.5 billion, a private equity raise of $6.9 billion by UK-based Finastra, the buyout of US-based Avantax by Cetera for $1.2
billion, the venture capital
raise by California-based Generate for $1 billion, and the acquisition of
Brazil-based Pismo by Visa for $1 billion.
Regional and Sector Trends
This drop
occurred across all major regions, with the steepest declines in Asia-Pacific
and Europe. Investment in the Americas showed the most resilience but still
fell 18% year-over-year. The US continued to lead, accounting for nearly
two-thirds of all fintech funding, securing $78.3 billion over 2,136
transactions.
These figures are confirmed by a separate report from Innovate Finance, which was presented earlier this year. It claims that the United Arab Emirates has managed to break free from the negative trend, with fintech funding nearly doubling, growing 92%.
Payments
remained the top sector by deal volume, despite funding falling 64% to $20.7
billion. Proptech and insurtech were rare bright spots, being the only
subsectors seeing rising investment.
“While the
investment numbers are soft now — due to broader market conditions — the next
year could be quite exciting for innovation in the fintech space,” added Karim
Haji, the Global Head of Financial Services at KPMG.
However, global
venture capital (VC) investment in fintech witnessed a significant decline
year-over-year and between the first and second halves of 2023. The total VC
investment plummeted from $88.8 billion in 2022 to $46.3 billion in 2023,
marking a substantial decrease. Similarly, the VC investment between H1 ($27.5
billion) and H2 ($18.8 billion) also experienced a sharp drop. Notably,
investment in later-stage deals decreased drastically from $37.4 billion in
2022 to $14.1 billion in 2023.
Fintech
investors grew more cautious amidst global instability, inflation concerns, and
doubts about valuations and exit opportunities. They increasingly focused on
profitability and sustainability, shunning risky bets. Partnerships and B2B
solutions attracted interest as did AI and embedded finance.
Murky Forecasts
Investment
is expected to stay soft in early 2024 before recovering later in the year as
rates potentially fall. M&A activity may also pick up as investors buy
distressed assets.
The report
highlighted one outlier to the trends: seed and early-stage funding hit record
highs in terms of deal numbers, indicating investors are still keen to test new
fintech models. Additionally, the report mentioned that AI would play an increasingly significant role in the fintech industry. This was also the topic of one of the recent panels during the Finance Magnates London Summit.
As the
report concluded, enhancing profitability and sustainability will be key for
fintech firms to thrive long-term amidst the current challenges.
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
Click Here to Disrupt: Pay by Bank's Revolution in Online Payments
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
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20-22 MAY 2024
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#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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