According to KPMG ”Pulse of Fintech” for the second half of 2021, fintech investment was incredibly strong, with both VC and PE investment soaring to record highs. The breadth of fintech solutions attracting investment continued to expand and grow, with surging interest in cryptocurrencies and blockchain, wealthtech, and cybersecurity.
Entering 2022, the optimism for fintech investment globally is very strong, with different subsectors well-positioned to keep evolving and new ones expected to emerge and flourish.
VC investment globally reached a record $115 billion in 2021, surpassing the previous high of $53.2 billion set in 2018. Corporate VC-related investment accounted for $50 billion of this total — more than double the $24 billion seen in 2020.
Globally, financial institutions are under significant pressure to reduce their reliance on legacy infrastructure and improve their core banking systems in order to facilitate better customer experiences leveraging the cloud. Over 2021, there has been a surge in interest in fintechs able to help with such activities, particularly from Tier 1 banks.
Investment in the crypto and blockchain space soared in 2021, rising from $5.4 billion in 2020 to over $30 billion. Globally, there was an incredible increase in the level of recognition for the potential role of crypto and its underlying technologies in modern financial systems. Increasing activity in the space has also sparked further action from central banks, some of which are considering the development of digital currencies in the footsteps of the digital yuan in China.
Globally, PE firms were more active in the fintech sector than ever before in 2021, with a record 144 deals accounting for over $12 billion in investment – twice the previous high of $5 billion in 2018. Building on a strong H1’21, H2’21 saw a number of large PE deals in the US (NYDIG – $767 million, Mindbody – $500 million, iCapital Network - $440 million), the UK (Genesis Digital Assets - $431 million, DivideBuy - $413 million), Brazil (Provo - $251 million), Vietnam (Vietnam Payment Solution - $250 million), and India (Vastu Housing Finance - $200 million).
