2024 got off to a challenging start for the fintech market globally, driven by ongoing concerns related to geopolitical uncertainty and high interest rates. Total global investment declined from $62.3 billion to $51.9 billion between H2’23 and H1’24—the lowest six months of fintech investment since H1’20. All regions experienced a noticeable drop in fintech investment, with the EMEA region experiencing the sharpest drop—from $19.4 billion to $11.4 billion between H2’24 and H1’24.
Globally, only five $1 billion+ deals occurred in the fintech space during the first half of 2024—all buyouts. The Americas accounted for four of these deals, including Worldpay ($12.5 billion) and EngageSmart ($4 billion) in the US and Nuvei ($6.3 billion) and Plusgrade ($1 billion) in Canada. The UK accounted for the fifth deal—the $4 billion buyout of IRIS Software group. The UK also saw the largest fintech focused VC deal of H1’24—a $999 million raise by Abound.
While fintech investment remained suppressed, deal volume offered a hint of optimism for the fintech market; both the Americas—including the US—and the ASPAC region saw deal volumes increase between H2’23 and H1’24.
At a sector level, payments continued to draw the largest share of fintech funding globally, attracting $21.4 billion in H1’24. Regtech, however, was the only major fintech subsector to see investment increase in the first half of 2024—with the $5.3 billion in investment already surpassing 2023’s total. At a technology level, AI continued to be a very hot area of interest for investors, particularly in the US.
Looking back on the first half of 2024, the sentiment of fintech investors can be characterised as restrained. Consider some of the key trends we’ve seen across the fintech sector over the past six months:
- Mature, stable markets attracting the largest fintech deals.
- Investors continuing to shy away from the largest deals, with very few exceptions.
- AI drawing significant interest, both as a means to improve operating efficiencies and as a means to reduce costs.
- Regtech interest continuing to increase, particularly in the EMEA region.
With interest rate cuts taking longer to materialise than initially expected, the pick-up in investment activity predicted in H2’23 is taking longer than originally thought to come to fruition. Heading into H2’24, fintech investment is expected to remain subdued—except, perhaps, when it comes to AI and generative AI—given the continued high cost of capital and geopolitical uncertainty.
Kiwi context
In Aotearoa New Zealand, Fintech is our fastest growing and most lucrative tech vertical1. We're seeing a steady increase in the adoption of digital banking and electronic payment methods, and the dynamic nature of the fintech market points to a promising future.
Emerging FinTech is transforming the way we borrow, lend, save, spend, store and transfer money. New Zealand is on the cusp of open banking and the benefits this can bring and startups and established financial institutions alike are leveraging technology to offer diverse services such as online payments, digital banking, peer-to-peer lending, and blockchain solutions.
Initiatives to promote fintech entrepreneurship and investment have further fuelled the sector's expansion. Additionally, collaborations between fintech firms and traditional banks are creating new opportunities for financial inclusion and accessibility. Continuing this focus on user experience and security will enable the New Zealand fintech market to evolve and expand its impact on the financial landscape.
Recently there has been a legislative push to open consumer data between data holders, merchants, and distributors in New Zealand. We believe this foreshadows a radical transformation for data holders, financial services, and payment participants across Aotearoa. Now is the time for organisations to think strategically about tapping into these opportunities to transform their business and uplift their customers’ experiences.
1https://www.flipsnack.com/tin100/nz-fintech-report-2024/full-view.html?2024+NZ+Fintech+Report
For Aotearoa New Zealand, Fintech has cemented its place one of our fastest growing industries, outpacing the wider tech industry in terms of revenue. The high cost of capital and geopolitical uncertainty has put a damper on investments both globally and locally, and the fintech market isn’t immune to that, with investment levels for New Zealand falling since 2023. However, the New Zealand market is fortunate that government initiatives to promote fintech entrepreneurship and investment continue to fuel the sector's expansion.
Pulse of Fintech H1'24
Whether you’re the CEO of a large financial institution or the founder of an emerging fintech, it’s critical to consider how your company can become more efficient and profitable given the cost of capital will likely remain high for some time. As you read this edition of Pulse of Fintech, ask yourself: How can we position our organisation to be more competitive and sustainable both now and in the future?
Download the report (PDF 3.2 MB) ⤓
Please get in touch if you'd like to discuss our Fintech insights and how we can help you navigate this journey.