During 2021, interest and investment in fintech grew significantly in many regions of the world — its scope broadening well-beyond its early definition. This expanding scope, combined with the growing maturity of a number of fintech subsectors, increasing investment in less mature jurisdictions, and surging corporate interest, is expected to keep investment high as we enter 2022. Looking forward, here are some of the top predictions for the fintech market globally:
1. Growing number of banks will offer embedded solutions
Embedded finance has been a growing trend over the past year and is well-positioned to grow even further as numerous banks look to become service providers to non-bank and non-financial institutions looking to deliver a customer experience or service proposition involving financial services as a component of a larger offering.
2. There will be increasing regulatory scrutiny of embedded finance offerings
The increase in financial products or services embedded within and delivered through non-regulated entities is expected to drive greater levels of regulatory awareness and intervention over the next 6 to 12 months as regulators look to protect customers by clarifying issues like accountability and available recourse.
3. Fintechs will focus on branding themselves as data organizations
Many fintechs will likely reinvent themselves into data organizations and data providers that happen to provide payments and other financial services in order to differentiate their organizations in the eyes of investors and the market.
4. ESG-focused fintechs will have a big growth trajectory
Given the growing prioritization of ESG happening more broadly, there will likely be increasing interest in fintechs with ESG capabilities, including companies focused on climate change, decarbonization, and the circular economy.
5. There will be a stronger focus on dealmaking in underdeveloped regions.
Investors will ramp up their targeting of jurisdictions considered to be underdeveloped in terms of financial services — making more deals in regions like Africa, Southeast Asia, Latin America, and the Middle East.
6. Unicorn status will lose some of lustre in developed markets, remain key in emerging ones
The incredible rise in the number of unicorn companies, particularly in the US, will likely make the status less valuable for companies in developed markets — although it should continue to be an important building block for startups in emerging markets and less mature fintech hubs.
Download Pulse of Fintech H2’21
VC investment soars and M&A makes a big comeback.
Download this edition for:
- global and regional analysis with key investment data and insights
- top fintech trends for 2022 and beyond
- interviews with Quantexa and Thought Machine
- fintech segment insights for a deeper dive into payments, insurtech, regtech, wealthtech, cybersecurity, blockchain and cryptocurrency
- spotlight articles on Emerging Markets: LATAM and Africa.
To learn more about the analysis and topics raised in this edition, or to discuss your organization's unique fintech agenda and roadmap, please contact your local KPMG advisors or the contributors in this publication.