Global fintech investment falls to 7-year low in 2024: KPMG

Bengaluru: It was another difficult year for fintech in 2024. The sector logged  just $95.6 billion of investment globally across 4,639 deals. Both global fintech investment and the number of deals fell to levels not seen since 2017, according to a report by KPMG out on Tuesday.

A storm of factors combined to soften investor appetite, including macroeconomic challenges, geopolitical conflicts and tensions, a year of major elections, and concerns about valuations and the lack of exits.

The second half of the year was notably slower than the first, with investment falling from $51.7 billion in the January-June period (H1 2024) to $43.9 billion in H2 2024.

At the same time, looking within H2, global fintech investment rose from $18 billion between July to September (Q3 2024) to $25.9 billion in Q4 2024, showing a slight improvement. Both mergers and acquisitions deal value and venture capital (VC) investment also rose quarter-over-quarter, from $7.4 billion to $14.2 billion and from $9.7 billion to $11.2 billion, respectively.

Regionally, the Americas attracted the largest share of fintech investment in 2024, with about $63.8 billion across 2,267 deals. Of this, the US saw a major chunk with $50.7 billion across 1,836 deals.

The Europe, the Middle East and Africa (EMEA) region attracted $20.3 billion across 1,465 deals, while the Asia-Pacific (ASPAC) region saw $11.4 billion across 896 deals.

India accounted for the largest share of the total fintech investment in the ASPAC region at $4.1 billion, down from $4.4 billion in 2023.

At a sector level, the payments space was the strongest, attracting the largest share of investment at $31 billion, clearly withstanding the low, rising from $17.2 billion in 2023. A large share of this investment was driven by consolidation and defensive plays rather than by companies looking to scale. This is followed by digital assets and currencies ($9.1 billion), and regtech ($7.4 billion).

With interest rates declining in many countries and election uncertainties easing, there’s a cautious sense of optimism within the fintech market heading into 2025, said the report.

While the payments space will likely remain the biggest ticket, digital assets and currencies are well positioned for an upswing in investment. AI is also expected to remain a key priority for investors, with regtech and cybersecurity-related solutions likely to see the most interest in H1 2025.