25 March 2020

Highlights of the Pulse of Fintech report of 2019 by KPMG

According to the Pulse of Fintech H2, a bi-annual report on global and regional Fintech investment trends that is published by KPMG, global Fintech investment in 2019 fell just shy of 2018’s record with $135.7 billion invested across 2,693 deals. 

Some of the most important global highlights of the 2019 report were: 

  • Cross-border M&A remains strong at $USD54.2 billion in deal value, despite ongoing global trade tension
  • Fintech deals by global tech giants on the rise with $USD3.5 billion invested across 46 deals in 2019
  • $USD135.7 billion in global Fintech funding in 2019, including record-setting $USD77.1 billion in Q3’19
  • Diversity was the key theme for 2019´s global Fintech market, as Fintechs and Fintech investment expand across product, sector and geographic borders. Because of the expanding definition of Fintech and its increasing reach and interconnectivity, Fintech investment stayed robust despite the global and economic and trade challenges that hindered growth in 2019 (for example, concerns related to Brexit, and the trade tensions between the US and China).

Some of the regional highlights for 2019 included: 

  • $22 billion First Data deal drives US-based Fintech investment to a new high in 2019 - with $59.8 billion in investment compared to $58 billion in 2018, the US set a new record for fintech funding in 2019.
  • Fintech investment in the Americas remains strong, compared to 2018 ($65.5), it just dropped slightly in 2019 ($64.2).
  • Europe sees banner year of fintech funding on 2019, setting a new record for Fintech funding (attracting $58.1 billion in investment compared to $43.4 billion in 2018).
  • Asia remains relatively steady in 2019, with $12.9 billion invested (in 2018, it saw a massive high of Fintech investment). 

For 2020, it is to expect that the lines are going to continue to blur between financial services and non-financial services. This is mainly due to the fact that big techs like Alibaba, Tencent, Google and others continue to look for ways to integrate financial services within their ecosystem of offerings to their customers. Thus, 2020 will probably be an exciting year for Fintech. 

Key predictions for 2020 include: 

  • An increased focus on the Fintech space by big tech giants like Alphabet, Alibaba and Tencent is predicted by experts. 
  • Maturing Fintechs and challenger banks are likely to continue to expand the extent of their service offerings beyond their initial niche focus areas and make strategic moves across international borders.
  • Consumers are expected to increasingly seek a primary interface to manage all of their financial affairs on a holistic level, therefore the unbundling of financial products will begin to reverse course. 
  • Cybersecurity-focused Fintechs will become more attractive as traditional financial institutions shift from building to buying cyber solutions - particularly in areas like fraud, security, and identity management.
  • As bigger and bolder M&A deals become the norm in more mature Fintech sub-sectors, consolidation is going increase. 
  • After Australia and Hong Kong, more countries in the Asia Pacific region will develop digital banking regimes and use digital banking licenses to guide digital bank efforts.
  • The focus on open data opportunities will move beyond banking and into other aspects of the financial services industry.
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