The second half of 2022 was particularly challenging for the fintech sector globally amidst a combination of challenging economic conditions like high inflation and interest rates and specific market challenges like the lack of IPOs and exit opportunities, continued downward pressure on valuations and margin pressures for companies in areas like buy now, pay later. With little sign that the challenging market conditions will begin to alleviate as we head into H1’23, fintech investment is expected to remain relatively subdued, even compared to H2’22 — although a number of fintech subsectors are expected to be more resilient than others.
Payments remained the strongest area of fintech investment globally in 2022, with US$53.1 billion in investment compared to US$57.1 billion in 2021; Regtech was the only sector to buck the downward trend, with investment in the space rising from US$11.8 billion in 2021 to a record US$18.6 billion in 2022.
Investment in crypto and blockchain fell from US$30 billion in 2021 to US$23.1 billion in 2022. The decline in the second half of the year was particularly sharp—as scrutiny in the space picked up significantly in the wake of the May Terra (Luna) crash and the November bankruptcy of FTX.
Payments space dominates fintech market, attracting US$53.1 billion in investment in 2022
Despite a decline in investment year-over-year, payments remained the hottest fintech sector for investment globally in 2022, accounting for over $53.1 billion of total investment. The $27.9 billion acquisition of Australia-based Afterpay in H1’22 accounted for more than half of this total. The largest M&A deals in H2’22 was significantly smaller, including the buyout of US-based Computer Services Inc. $1.6 billion and the $700 million acquisition of proximity payments company International Game Technology. Explore the full report to learn more.
Investment in insurtech falls to seven-year low in 2022
Global investment in the insurtech sector dropped to a seven-year low of US$7.1 billion in 2022, which may reflect some investor pullback in light of the post-IPO performance challenges that several insurtechs that have gone public in recent years have experienced. Despite the slowdown overall, there were positive notes: H2’22 saw all three key regions (i.e., Americas, EMEA, Asia-Pacific) attracting large deals, including the completion of the $500 million acquisition of US-based Metromile by Lemonade (first announced in H2’21), a $400 million VC raise by Germany-based Wefox, a $315 million VC raise by US-based Pie Insurance and a $300 million VC raise by Singapore-based Bolttech. Explore the full report to learn more.
Regtech bucks downward trend, soars to record US$18.6 billion in global investment in 2022
In a year where most fintech verticals saw a decline in investment, regtech was a significant outlier — attracting a record high $18.6 billion in total investment globally in 2022 compared to $11.8 billion in 2021. Several large buyouts in the US during H2’22 helped drive regtech deal value, including the $8.4 billion buyout of tax compliance automation firm Avalara by Vista Equity Partners and the $1.6 billion buyout of financial and regulatory compliance firm Computer Services Inc. (CSI) by Centerbridge Partners and Bridgeport Partners. Explore the full report to learn more.
The wealthtech sector globally attracted over $1.2 billion in total investment during 2022 — a very strong year, despite the decline from 2021’s investment peak of $2 billion. H2’22 saw the two largest wealthtech deals of the year, including the $323 million acquisition of UK-based Pollen Street Capital and the $300 million raise by Singapore-based crypto firm Amber. Explore the full report to learn more.
Investor interest in cybersecurity globally remained high in 2022, despite total investment in the space dropping from over $5 billion in 2021 to just over $2.1 billion in 2022. The lack of mega-M&A deals in the cybersecurity space largely accounted for the slide in funding as the volume of deals remained steady year-over-year. VC-deals attracted the bulk of investment during 2022, including a $200 million raise by Cayman Islands-based Ethereum scaling firm Matter Labs, a $152 million raise by US-based KYC focused company Alloy and a $150 million raise by Israel-based fraud prevention firm nsKnox in H2’22. Explore the full report to learn more.
Crypto space comes under intense scrutiny in wake of FTX downfall
After 2021’s year of explosive growth, including $30 billion in investment globally, total investment in crypto and blockchain dropped to $23.1 billion in 2022 — although the level of investment remained incredibly strong compared to all years prior to 2021. The bulk of investment in the space came in the first half of the year, including the $1.1 billion SPAC merger of Japanbased Coincheck and a $1.1 billion VC raise by Germany-based Trade Republic. The largest deals in H2’22 were relatively small by comparison, including the $300 million VC raise by Singapore-based crypto trading platform Amber, the $200 million raise by Cayman Islands-based Ethereum development firm Matter Labs and a $165 million raise by US-based decentralized cryptocurrency exchange Uniswap. Explore the full report to learn more.
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Global Head of Financial Services Innovation and Fintech, KPMG International
Global Head of Financial Services, KPMG International
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