Global fintech investment declined from $111.2 billion (R1.9 trillion) in the second half of last year to $107.8bn in the first six months of 2022, according to the KPMG’s Pulse of Fintech report released this week.
It shows that investment in this sector remained remarkably resilient compared to historical trends, given the challenges affecting broader corporate action, including geopolitical uncertainty, growing inflation, and increasing interest rates.
According to the report the Asia-Pacific region saw total fintech investment more than double – from $19.2bn to a record $41.8bn in the period under review – with the $27.9bn acquisition of Australia-based Afterpay by Block accounting for more than half of this total.
Afterpay Limited is an Australian financial technology company best known for its buy now, pay later service.
Meanwhile, both the Americas and Europe, the Middle East and Africa regions saw fintech investment dip – from $59.7bn to $39.4bn and from $31.6bn to $26.6bn respectively.
Closer to home, the Fintech Times‘ Fintech: Middle East and Africa 2021 report states that South Africa is historically a major trade and investment commercial hub for the African continent to do business globally.
It is unique in that it has two global cities – Johannesburg and Cape Town. With respect to financial services as a whole, the largest city in South Africa is home to some of Africa’s leading banks and financial institutions, such as Standard Bank Group, FirstRand, Absa Group, Investec and Nedbank Group, deciphering it as a potential fintech magnet for Africa, it states.
“It is not only home to the country’s primary financial cluster but has developed an ecosystem where fintech can thrive.”
Venture capital deals set a record high for a six-month period ($16.6bn), led by the world’s two largest raises during the period: a $1.1bn raise by Germany-based Trade Republic and a $1bn raise by UK-based Checkout.com in the EMEA (Europe, The Middle East and Africa) region. Trade Republic Bank is a German online broker in Berlin. Checkout.com is an international financial technology company that processes payments for other companies. Founded as Opus Payments in 2009, it is headquartered in London.
It had a valuation of $40bn in 2022, making it the most valuable European fintech start-up
In March this year, South African cryptocurrency exchange VALR raised a $50 million Series B funding round that values the company at $240m, and will use the proceeds to expand across the continent.
Last week, local independent mobile payments, insights, loyalty, and rewards platform Zapper teamed up with payments and data fintech start-up API Stitch via its LinkPay product, to bring the latest in payments innovation to more than one million Zapper customers.
Now Zapper users can make secure Instant EFT payments at POS in just one click, every time they pay, by linking their bank account in the Zapper app.
Late last year was a banner year for the fintech market globally, which makes the first half of 2022 seem slow by comparison, said Anton Ruddenklau, global head of Financial Services Innovation and Fintech, KPMG International.
“But in reality, many sectors within the fintech market have shown strength and resilience.”
While the fintech market will likely be challenged in the second half of this year, he said, due to global uncertainty and broader economic concerns, Fintechs will likely continue to attract significant attention and investment – even if at lower levels than last year.
According to Shamit Govind, a partner at Digital Consulting at KPMG SA, “Whether you’re the CEO of a large financial institution or the founder of an emerging fintech, understanding how market dynamics have shifted could be critical to your competitiveness and sustainability.”
“Fintech investors are now becoming more discerning with their investments —focusing on profitability and cash flow when evaluating opportunities. Investors are also likely to pay more attention to areas adjacent to traditional financial services offerings, such as open data and decentralised finance. Certainly, the business-to-business space is also expected to be a high priority for investors, and we also anticipate increasing focus on underdeveloped fintech markets, including Africa.”
Interest in cybersecurity remained very strong at mid-year, with $1.2bn in investment globally, including four big raises in the US: a $550m raise by Fireblocks, a $170m raise by Chainalysis, and $100m raises by TokenEx and Cowbell Cyber. In March, Google also announced plans to acquire incidence response company Mandiant for $5.2bn. If completed, the deal would single-handedly break 2021’s record $5.2bn in global cybersecurity investment.
BUSINESS REPORT