Investment in the global fintech sector has reached $98bn in the first half of 2021. It was recently reported by KPMG`s bi-annual report on the investment trends in the fintech sector.
The sector has proved to be a hot bet from an investment perspective. Both venture capital (VCs) firms and startups are reaping the fruits of the hard work that was put into building the fintech ecosystem that suits the needs of future generations.
Dry powder cash reserves, increasing diversification in hubs and subsectors, and strong activity globally contributed to the record start to 2021, with funding increasing from $87.1 billion in the second half of 2020 to $98 billion in the first half of 2021.
Even countries like Nigeria have benefited from the growing fintech sector in the past few months. According to The Financial Times, global payments made via fintech platforms could exceed legacy banks.
Fintech valuations remained very high in the first half of 2021 as investors continued to see the space as attractive and well-performing — a likely driver in the explosion of unicorn births with 163 created in the first half of the year.
Under pressure to increase the velocity of their digital transformation and to enhance their digital capabilities, corporates were particularly active in venture deals, participating in close to $21 billion in investment over nearly 600 deals globally, with many realizing it’s quicker to do so by partnering with, investing in, or acquiring fintechs.
Looking forward to the second half of 2021, total fintech investment is expected to remain very robust in most regions of the world. While the payments space is expected to remain a dominant driver of fintech investment, revenue-based financing solutions, banking-as-a-service models, and B2B services are expected to attract increasing levels of investment from venture capital firms around the globe.
Given the rise in digital transactions and the subsequent increase in cyberattacks and ransomware, cybersecurity solutions will likely also be high on the radar of investors.
Fintech companies have also taken a big part in this as we can anticipate digital currencies to be the new currency, through which IOTs can also transform and be able to eventually make seamless transactions. Decentralized finance is also disrupting the traditional lending space and several neobanks have emerged as winners, so VC Capital is flowing into fintech and we expect this to continue over the next year.