H2 2022 - Pulse of Fintech latest edition

2022 was a challenging year for fintech investment globally — with the Americas in particular seeing a $40 billion drop in investment compared to 2021’s high. The decline in deal value doesn’t tell the full story, however. Deal volume was incredibly robust this year: the second highest total next to 2021. Seed deals saw record investment, which bodes well for the long-term fintech pipeline. At a sector level, regtech investment soared to a new high, while geographically, the Asia-Pacific region also hit a new peak — if by a much narrower margin.

The diversity of jurisdictions attracting significant fintech deals was also very strong. In H2’22 alone, 24 different countries attracted $100 million+ fintech deals (VC, PE, M&A) — ranging from traditional hubs like the US, UK, Singapore and Hong Kong (SAR) to less mature fintech hubs like South Korea, Luxemburg, Italy, Malaysia and the UAE. This diversity reflects the myriad value propositions offered by fintech around the world, from enabling innovation at financial institutions to supporting small business growth and improving financial inclusion and access to financial products.

Looking across 2022 as a whole, there’s no doubt that the fintech market globally saw both highs and lows. Consider some of the key trends we’ve seen:

Latest edition – H2,2021

Fintech VC, PE, and M&A activity in United Arab Emirates saw significant growth this year. The UAE continues to foster an environment that encourages and celebrates innovation in Fintech. Recent developments are outlined below:

  • In October 2021, the Central Bank of the UAE (CBUAE) signed an agreement with Dubai International Financial Centre (DIFC) at Expo Dubai to enhance collaboration under their co-sandbox program for Fintechs.i
  • In September 2021, Dubai International Financial Centre (DIFC) launched a series of events as part of DIFC Blockchain week– including seminars, keynote addresses, and roundtable discussions with leading regional market practitioners.ii
  • In August 2021, the Abu Dhabi Global Market (ADGM) launched its annual Fintech Abu Dhabi Festival, bringing together global stakeholders, with more than 90 companies participating. The Festival hosted an Innovation Challenge, in which Fintech firms presented on specific problem statements in return for specialist deployment support from key players in the industryiii iv
  • DIFC Fintech Hive signed an MoU with Fintech Tel Aviv in October 2021, testament to strengthening UAE-Israel relations.v Meanwhile Israel-based venture firm, OurCrowd, announced its approval and licensing by ADGM to operate in the UAE, from November 2021, making it the first-ever Israeli venture capital firm to obtain licensed status with ADGM.vi
  • In November 2021, VentureSouq, the UAE-based investment company focused on early stage technology businesses, unveiled a USD 50 million venture fund aimed at the Fintech sector. 
  • Northern Ireland-based Fintech firm, Regtick, announced plans for business expansion in Abu Dhabi in November 2021. The company plans to offer regulatory consulting services in the emirate, in line with the UAE’s strategy of rebranding existing financial services centres.viii
  • The Innovation Hub in DIFC allocated about USD 100 million in October 2021 to helping startups grow through its ‘Fintech Fund Accelerator Program’.ix 
  • The UAE-based Fintech Galaxy raised USD 2 million in a Seed funding round held in October 2021, led by Jordan’s Ahli Fintech. The funding round was also joined by Raz Holding Group, OMQ Investments, Egypt’s EFG EV Fintech and INSEAD Saudi Angel Investors.x
  • Abu Dhabi-based global investment-related tech ecosystem, Hub71, selected its new cohort of startups to join its community in the UAE capital. The cohort gathers startups at various stages of growth that have collectively raised USD 34 million in funding in Q22021 and, further committed to relocating 82 entrepreneurs to Abu Dhabi.xi 
  • Fintech firm Paycraft has set up operations in the UAE in November 2021. The firm is planning to expand its footprint in the GCC region, partnering with various local service providers to help users with small ticket size payments (both online and offline) for bus and metro services, along with retail payments.xii
  • To expand cross-border payments in the MEA region, the Dutch payments infrastructure company, TerraPay, signed an MoU with the UAE-based Network International in August 2021, to promote mobile wallet acceptance and digital currency usage across the UAE.xiii
  • Surging investment in regtech as companies look to technology to help them manage their increasingly complex regulatory compliance obligations 
  • Rapidly cooling investment in cryptocurrencies and crypto exchanges between H1’22 and H2’22, with more challenges expected on the horizon
  • Strengthening partnerships between fintechs and incumbent financial institutions, including banks, insurance companies and wealth management firms
  • Decreasing number of large deals in H2’22 compared to 2021 and H1’22 as investors waited for valuations to stabilize.

With the word recession being used more and more, the IPO window still closed and the valuations of late-stage companies still under pressure, there could be a bumpy road ahead as we enter 2023. But there continues to be money in the fintech market globally. Fintechs that have strong value propositions and that can really show the viability and sustained profitability of their business models will likely continue to attract attention — particularly in sectors like regtech and cybersecurity.

Longer term, we believe the outlook for fintech investment remains quite positive given the ongoing transformation of financial services around the world and the strengthening focus on embedding financial services into other sectors.

Whether you’re the CEO of a large financial institution or the founder of an emerging fintech, focusing on getting the most from every dollar you invest can help you forge a strong path forward. As you read this edition of Pulse of Fintech, ask yourself: What do we need to do to become more resilient as an organization and how can we use our strengths to create unique value for our customers, clients and investors?


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Pulse of Fintech H2'22

Biannual analysis of global fintech investments.

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i https://www.internationalinvestment.net/news/4038566/uae-central-bank-agrees-Fintech-push-abu-dhabi-gm-difc

ii https://www.taylorwessing.com/en/insights-and-events/insights/2021/09/me-the-uaes-evolving-Fintech-landscape-regulatory-changes-and-recent-initiatives-in-the-region

iii https://www.taylorwessing.com/en/insights-and-events/insights/2021/09/me-the-uaes-evolving-Fintech-landscape-regulatory-changes-and-recent-initiatives-in-the-region

iv https://wam.ae/en/details/1395302965916

v https://www.orfonline.org/expert-speak/did-the-us-uae-israel-trilateral-dialogue-foreshadow-a-new-quad-with-india/

vi https://ibsintelligence.com/ibsi-news/ourcrowd-becomes-first-israeli-venture-capital-firm-to-operate-in-the-uae/

vii https://cryptodeva.com/2021/11/21/uaes-venturesouq-unveils-50m-venture-fund-to-support-menas-Fintech-sector/

viii https://www.thenationalnews.com/business/technology/2021/11/22/northern-irelands-rich-Fintech-ecosystem-attracts-the-uae-spotlight/

ix https://www.khaleejtimes.com/finance/Fintech-investments-growing-across-me-region

x https://www.intelligenttechchannels.com/2021/10/19/Fintech-galaxy-closes-us2-million-seed-funding-for-first-mena-open-finance-platform/#

xi https://theFintechtimes.com/hub71-is-helping-quality-startups-establish-themselves-within-the-uae-market-with-new-programme/#:~:text=Hub71%2C%20Abu%20Dhabi%E2%80%99s%20global%20tech%20ecosystem%2C%20has%20selected,10%20startup%20ecosystems%20worldwide%2C%20according%20to%20Startup%20Genome

xii https://www.thehindu.com/business/paycraft-forays-into-uae-to-step-in-africa-soon/article37547570.ece

xiii https://www.pymnts.com/news/international/2021/terrapay-network-international-promote-digital-payments-the-uae/

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Anton Ruddenklau

Global Head of Financial Services Innovation and Fintech, KPMG International

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Judd Caplain

Global Head of Financial Services, KPMG International

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