Will Fintech Investments Be Able to Withstand the Present International Turmoil?

GDS Modellica
A few months ago, we posted on this blog looking at how the fantastic performance of fintech investments suggested that things would soon return to normal in the financial sector (and in other areas of life too). This projection was used to put together the study published regularly by the renowned firm KPMG. In their latest revision concerning the first half of 2022, they have observed a notable decline, which is even more accentuated in the second quarter of the year, as a result of the intense turmoil and tension faced by international markets.

Despite this, the consultancy firm calls for calm, pointing to the fact that figures for 2021 were very much “outliers”. They also stress that there were plenty of positives this year that should not be overlooked, including the stability of investments in Europe and the record investments seen in the Asia-Pacific and EMEA regions.

Looking at the raw figures, overall fintech investment fell from $111.2 billion across 3,372 deals in the first half of 2021 to $107.8 billion across 2,980 deals in the first half of 2022. Added to this, the number of deals in the second quarter (April-June) fell by approximately 25% with respect to the first quarter (January-March) with deal values more than halving, falling to $34 billion from $73.8 billion.

Here at GDS Modellica, we wanted to revisit our infographic from a few months ago and update it with the most recent data. That way, we can provide a more accurate picture of the market as it continues to evolve. As well as the points we have highlighted in the infographic, we also wanted to summarise the trends identified in the report, which as always, we recommend reading in full. According to KPMG, here are the most important trends revealed by the data:

  1. Market corrections, including declining valuations, increasing mergers and acquisitions and a growing number of businesses in difficulty, in light of the predicted recession and the over-enthusiasm and over-investment in key areas during the last 18 months.
  2. Continued focus on embedded solutions, including payments, finance and insurance.
  3. Big tech companies and other corporations prioritising partnerships, while also looking for opportunities for add-ins at bargain prices compared to recent years.
  4. Growing focus on B2B solutions aimed at the improvement of infrastructure or the optimisation of operational activities like AR/AP.
  5. Slowdown in crypto interest and investment, particularly retail firms offering coins, tokens and NFTs.
  6. Increasing focus on underdeveloped fintech markets, including jurisdictions in Africa.
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