According to KPMG's Pulse of Fintech.
— Global fintech investment was US$ 105 billion in 2020 – the third highest annual total ever thanks to strong VC investment throughout the year
— US$71.9 billion in fintech investment (M&A, PE, and VC) in H2'20, compared to US$ 33.4 billion seen in H1' 20
— US$ 42 billion in fintech-focused VC investment makes 2020 second best year ever
— Cybersecurity-focused investment quadruples in 2020 – to US$ 2 billion.
According to the Pulse of Fintech H2'20, a bi-annual report on global fintech investment trends published by KPMG, overall global fintech funding across M&A, PE and VC was US$ 105 billion across 2,861 deals in 2020: the third highest level of investment in fintech ever.
With the exception of M&A – which saw deal value drop over 50 percent (from US$ 130 billion in 2019 to US$ 61 billion in 2020) – the overall fintech market proved remarkably resilient in 2020 despite a broad array of uncertainties, from the global pandemic to the US presidential election. Following a short COVID-19 driven pause in H1' 20, fintech investment bounced back strongly in H2' 20, more than doubling from H1' 20 (US$ 33.4 billion) to H2' 20 (US$ 71.9 billion). The US was the dominant benefactor for fintech investment in 2020, while the payments space continued to dominate investment from a sector perspective.
Despite global uncertainty, VC investment was strong in all regions of the world. Global fintech-focused VC investment reached US$ 42 billion in 2020, including US$ 20.5 billion in H2. Both the Americas (US$ 23 billion) and EMEA (US$ 9.2 billion) regions saw record highs of annual fintech-focused VC investment. US-based wealthtech Robinhood raised the most VC funding in H2' 20: US$ 1.3 billion across two rounds (US$ 600 million and US$ 668 million). Several digital banks also raised funding rounds greater than US$ 500 million, including Sweden-based digital bank Klarna (US$ 650 million), UK-based Revolut (US$ 580 million), and US-based Chime (US$ 533 million).
Manav Prakash, Partner, Advisory services, KPMG in Bahrain, commented on the report, “Given the uncertain backdrop, Fintech Investments have been strong globally in H2. Overall, we see the pace of digitalization in the Financial Services Sector gather significant momentum wherein many players are bringing forward their digitalization plans, including in Bahrain. This also includes a serious evaluation of potential Fintech partners who can speed up entry into specific product segments or help reimagine the customer experience. We are also seeing a growing interest from Fintech firms wanting to establish partnerships with other institutions in Bahrain”
Mahesh Balasubramanian, Partner, Financial Services, KPMG in Bahrain stated that “Bahrain offers an excellent ecosystem for Fintech players to establish their regional base and we are witnessing increasing interest from Fintech’s wanting to expand their presence in the region. With the introduction of the Open Banking regulations and use cases, we believe this space will see more innovation and collaboration in the immediate future.”
*All figures referenced are in USD.
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