2024 proved to be another challenging year for the global fintech market as both total investment ($95.6 billion) and the volume of deals (4,639) fell to seven-year lows. Ongoing macroeconomic challenges, geopolitical conflicts and tensions, and a number of high-profile elections in major jurisdictions around the world kept the level of uncertainty very high, leading to a pullback in fintech investment particularly on the M&A and PE fronts.
H2’24 was more subdued than H1’24 by a fair margin. Total global investment fell from $51.7 billion to $43.9 billion between the first and second halves of the year, driven by M&A deal value and VC investment falling from $28.1 billion to $21.6 billion and from $22.5 billion to $20.9 billion, respectively. But these numbers only tell a part of the story, as Q3’24 and Q4’24 saw wildly different results; M&A deal value nearly doubled from $7.4 billion to $14.2 billion quarter-over-quarter, while VC investment rose from $9.7 billion to $11.2 billion over the same period.
The Americas accounted for the largest share of fintech investment in H2’24 ($31 billion), including the only $1 billion+ deals (Nuvei — $6.3 billion, Envestnet — $4.5 billion, Candescent — $2.45 billion, Transact Campus - $1.6 billion, Bridge - $1.1 billion). Comparatively, the EMEA region attracted $7.3 billion — led by the $561 million acquisition of Netherlands-based Knab Bank, while ASPAC saw $5.5 billion — led by a $788 million raise by Philippines-based Mynt. The payments space remained the hottest fintech subsector over 2024 by far, attracting $31 billion in investment, followed by digital assets and currencies ($9.1 billion) and regtech ($7.4 billion).
Looking back over the second half of 2024, we can see how the sentiment of fintech investors shifted from cautious to cautiously optimistic. Key trends we saw during H2’24 included:
- A noticeable uptick in investment in between Q3’24 and Q4’24.
- Strengthening consolidation in the payments industry
- Growing focus on defensive plays, including take private deals and divestitures
- Increasing use of secondary transactions to provide liquidity
Heading into 2025, there is growing positivity for a rebound in global fintech investment given declining interest rates and some lessening of uncertainty in the wake of what was a key election year. Many eyes will be on the US in H1’25 as early actions by the new administration could have an effect on fintech investment activity moving forward.
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 take advantage of cuts to interest rates and the declining cost of capital to seize the opportunities that might be in store for the year ahead. As you read this edition of Pulse of Fintech, ask yourself: How can we ensure that our organization is well positioned to take advantage of emerging opportunities while still managing our risks effectively?
Here are our top predictions for fintech in H1’25:
1
B2B-focused fintechs will continue to see significant interest and investment:
Interest in the B2B space will continue to surge over the next six months, particularly in areas like payments and regtech.
2
PE firms will increasingly participate in fintech deals:
PE firms have been sitting on the fence for quite some time due to market conditions and concerns about valuations. In H1’25, PE participation in fintech deals will likely grow given their abundance of dry powder and the growing pressure they are facing to get more active and to provide returns.
3
M&A activity will continue to pick up:
Following on the uptick in Q4’24, M&A activity will likely grow in H1’25, driven both by increasing consolidation as startups look to gain scale in order to become more competitive or better manage regulatory pressures and as corporates increasingly look for opportunities to make strategic acquisitions.
4
Interest in AI enablement will grow:
Fintech investors — particularly corporates — will show increasing interest in startups focused on AI-enablement, such as using AI to improve the efficiency and effectiveness of activities like regulatory compliance and cybersecurity, or to enable customer facing staff to provide more value or quicker responses to customers.
5
Regtech will continue to be a priority for investors in the EMEA region:
Regtech will continue to gain attention from investors, particularly in the EMEA region given the increasing complexities associated with ensuring regulatory compliance.
6
Partnerships will remain a key focus in ASPAC:
Cross-jurisdictional fintech partnerships will continue to grow the fintech ecosystem in ASPAC, with growing partnerships between regulators, between central banks, and between corporates and fintechs.
7
Changeover in US administration will likely boost investment in crypto:
All eyes will be on the US in H1’25 as the administration changes over given expectations of deregulation and a government more supportive of crypto. Should expected changes materialize, investment in the crypto and digital assets space will likely grow, particularly on the infrastructure front; globally, stablecoins and asset tokenization are also expected to see increasing interest from investors.
