Global FinTech investment fell in 2020

Global FinTech investment fell significantly in 2020 but rose again in the latter half of the year according to research by KPMG.

The professional services firm, in its latest Pulse of FinTech report, said global investment in mergers and acquisitions (M&A), private equity (PE) and venture capital (VC) totalled $105 billion across 2861 deals in 2020, a $60 billion fall from $165 billion in 2019.

M&A activity was worst hit, and saw deal value drop over 50 per cent, however investment in the sector overall proved robust despite economic instability.

Despite a slowdown in the early months of the pandemic, overall FinTech investment bounced back from $33.4 billion in the first half of 2020, to $71.9 billion in the second six months of the year.

The US accounted for more than 70 per cent of global FinTech investments last year, with investment rising from $20 billion H1’20 to over $55 billion in H2’20.

The US also created unicorns such as Next Insurance, Chainalysis, Better.com, Forter, while US-based consumer investing platform Robinhood raised $1.3 billion over two funding rounds, the largest amount of funding received by a single FinTech company in 2020.

In EMEA, FinTech investment dropped from $61.5 billion in 2019 to $14.4 billion in 2020, which KPMG attributed to Brexit and Covid uncertainty, though Klarna, Poland-based Polskie ePlatnosci, and Revolut raised funding of more than $500 million.

However, annual VC investment in EMEA reached a record $9.25 billion, hitting $3 billion in Q3 alone.

Asia-Pacific (APAC) FinTech investment dropped $16.8 billion in 2019 to $11.6 billion in 2020, a six-year low, with investment in South East Asia being particularly hard hit.

KMPG noted that the corporate-affiliated investment and the payments space were especially resilient in APAC.

China received just $1.6 billion in FinTech investment last year, which KMPG attributed to the dominance of domestic tech giants in the payments space.

India attracted $2.7 billion of FinTech investment in 2020, the second highest amount ever next to 2019’s peak of $3.5 billion, which KMPG said was driven by payments, InsurTech and WealthTech.

“A number of sectors floundered given the challenges of doing business in a pandemic environment,” said Anton Ruddenklau, global fintech co-leader, KPMG. “FinTech, for the most part, was not one of them.

“Covid-19 has been a catalyst for many fintech business models – a real proving ground given the accelerated demand for digital offerings coming from consumers and businesses alike.”

He added: “Payments and e-commerce platforms were particularly hot areas of investment, in addition to cybersecurity, given the increasing use of digital platforms.”

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