Global fintech investment last year fell just shy of 2018’s record with $135.7 billion invested across 2,693 deals, according to the Pulse of Fintech H2-2019, a bi-annual report on global and regional fintech investment trends published by KPMG.
The main theme for 2019’s global fintech market was diversity – with fintechs and fintech investment expanding across product, sector and geographic borders.
The expanding definition of fintech and its increasing reach and interconnectivity helped keep fintech investment robust despite the global economic and trade challenges that hindered growth in 2019, including concerns related to Brexit and ongoing trade tensions between China and the US.
In fact, despite these concerns, cross-border transactions remained high with $54.2bn in cross-border M&A deal value across 138 deals.
This focus on cross-border transactions will likely continue as maturing fintechs look to grow and achieve scale and the big tech giants look to extend their reach and gain market share in less developed markets.
Many niche areas of fintech continued to grow and evolve throughout 2019; in particular, proptech investment grew from $1.9bn in 2018 to a record $2.6bn in 2019, while fintech-focused cybersecurity investment more than doubled from $316.9 million to $646.2m.
Blockchain and cryptocurrency investment continued to fluctuate, falling from $6.3bn to $4.7bn year-on-year.
According to KPMG in Bahrain advisory partner Manav Prakash, in 2020, the lines are going to continue to blur between financial services and non-financial services – with big techs like Alibaba, Google and others continuing to look for ways to integrate financial services within their ecosystem of offerings to their customers.
“Integration will be a big priority and the unbundling of financial services that has occurred over the past few years will likely start to reverse as fintechs, traditional financial institutions, and big techs look to provide more value and more seamless experiences to their customers,” said Mr Prakash.
Anthony Harris, head of digital and innovation at KPMG in Bahrain, has noted that regulators are increasingly allowing new fintech entrants into their financial sectors in order to accelerate industry transformation.
“As the fintech-driven unbundling of incumbent financial institutions’ product portfolios hits a peak, the race is now on to re-bundle services and experiences around customer-centric, data-driven platforms. Competition is coming from neo-banks, fintechs as they look to scale, and technology platform challengers such as Amazon, WeChat, Alibaba. Firms that effectively orchestrate platform or ecosystem environments typically end up as the winners.”
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