Pulse of Fintech: These are the new trends in fintech investment

Globally, 2022 was a difficult year for fintech investments. The EMEA region (Europe, Middle East, and Africa) felt the effects of the more restrictive allocation of capital particularly keenly: The transaction volume fell from $79 billion, the record figure from the previous year, to $44 billion. The slump was mainly due to the significantly lower volume of mergers and acquisitions: $45.1 billion in 2021, compared with $16.3 billion in 2022. Venture capital deals also declined slightly from $31.7 billion to $25 billion, while private equity deals increased from around $2.2 billion to $3.5 billion at a low level.

Meanwhile, the U.S. market came off more lightly. The Asia-Pacific region even reached new highs in this volatile environment. There are also relevant new trends. This is shown in our report  „Pulse of Fintech H2`22“.

Transaction volumes in 2022 proved stable globally, reaching the second highest level ever recorded despite a nominal decline. 164.1 billion dollars were invested in 6,006 deals. According to our authors and analysts, there were new highs in seed deals - a promising sign for long-term fintech development. At the sector level, RegTech investments also set a new record. Regionally, the Asia-Pacific region stood out positively, with more investment than ever before during the period.

There was a wide variety of countries where significant fintech deals were made. In the second half of 2022, fintech deals worth more than $100 million each were completed in 24 countries - including in less established locations such as Luxembourg, South Korea and Malaysia. This diversity reflects the value propositions that fintechs currently offer, from driving innovation in financial institutions to supporting small business growth.

Germany is represented with one deal in the top ten transactions in the EMEA region: 1.15 billion dollars was given to the neobroker Trade Republic, based in Berlin. This means fifth place. In first place is the payments platform Sia from Italy (3.9 billion dollars).

Several particular trends emerge from the data: investment in RegTech is on the rise, as companies increasingly rely on technology to help them comply with increasingly complex regulatory obligations. Partnerships between fintechs and established financial institutions - including banks, insurers and asset managers - have also been strengthened.

A sharp decline, meanwhile, is noticeable in investments in cryptocurrencies and crypto exchanges. And it is becoming clear that investors have recently apparently been waiting for company valuations to stabilise: The number of large transactions decreased significantly in the second half of 2022.