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Investments in the fintech sector involve investing money in companies that develop technologies for financial services. This can include startups developing new payment systems, services for cryptocurrencies, smart contracts, or other innovative products in the financial sphere. Investors invest money with the aim of making a profit from the successful development of these companies and their products.
Here are some types of investments in this field:
1. Startups: Investors can invest money in young companies developing new financial technologies such as payment systems, financial analytical tools, blockchain solutions, and more.
2. Venture Funds: Investment funds specialize in the fintech industry and invest money in various companies to develop their products and services.
3. Corporate Investments: Larger financial institutions often invest in fintech startups or acquire them to increase their innovation capabilities and improve their services.
4. Crowdfunding: Sometimes investments in fintech can be raised through crowdfunding platforms, where private individuals can invest in projects that interest them.
5. Corporate Stocks: Fintech companies can also list their stocks on the stock market, offering investors the opportunity to buy a share in their business through equity markets.
These different forms of investments help fintech companies attract the necessary capital for development and innovation.
Last year was challenging for the global fintech market: both the total investment volume in fintech ($113.7 billion) and the number of fintech deals (4547) showed the lowest results since 2017.
This is stated in the report of the international audit and consulting company KPMG.
The annual decline in fintech investments occurred in all key regions, with the Asia-Pacific (ASPAC) region experiencing the largest decrease, from $51.3 billion in 2022 to $10.8 billion in 2023.
In Europe, the Middle East, and Africa (EMEA), investments dropped from $49.6 billion to $24.5 billion over the same period. America demonstrated the most resilience, with fintech investments decreasing from $95.4 billion in 2022 to $78.3 billion in 2023. At the jurisdictional level, the USA attracted two-thirds of all fintech funding for 2023 ($73.5 billion).
The payment sector continued to dominate fintech funding among fintech subsectors, despite a decrease from $57.9 billion to $20.7 billion between 2022 and 2023. Among the major fintech subsectors, only proptech and insurtech saw an increase in total investment volume on an annual basis.
From a technology standpoint, despite the funding decline in 2023, artificial intelligence remained the undisputed leader, attracting over $12.1 billion in fintech investments.
It is expected that fintech sector investments worldwide will remain relatively low, although they are likely to start growing with decreasing interest rates, with general consensus that this will occur in the 3-4 quarters. Artificial intelligence is expected to continue to be at the center of attention in addition to B2B solutions. Mergers and acquisitions activity is also expected to increase as investors seek opportunities to acquire distressed assets.
If you have questions regarding the investments into fintech, please contact us.
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Violetta Loseva
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Serhii Floreskul
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