During the first half of 2021, we saw interest in fintech grow to a fever pitch in most regions of the world. As we head into the second half of the year, this extraordinary momentum is expected to continue. Here are our top predictions for fintech in H2’21.
1. Crypto will be a hot focus for investors
H1’21 saw an explosion of activity in the blockchain and crypto space. We’ll likely see this trend continue, with focus stretching across the crypto ecosystem — from cryptocurrencies and trading platforms to NFTs, alternative asset trading, and support structures. The space will also see a more diverse range of investors considering investments in the space.
2. M&A activity will continue to surge
M&A activity will likely grow considerably as corporates look to expand their capabilities and offerings and fintechs look to scale. Cross-border activity will likely also be robust as fintechs look to become global or regional leaders. This could also drive the return of major mega M&A transactions.
3. SPACs could steal the spotlight
While IPO exit activity is expected to be strong in H2’21, we could see SPAC mergers stealing the limelight in H2’21 — particularly if Grab’s $40 billion SPAC merger goes ahead. We will likely also see a proliferation of US SPACs looking to EMEA and the Asia-Pacific region for targets.
4. Cybersecurity will gain even greater prominence
Given the rise in digital transactions and the subsequent rise in cyberattacks and ransomware, cybersecurity is a focus area for investors, particularly corporates. In addition to threat security, fraud management, KYC, and passwordless security will gain increasing attention from investors.
5. B2B services will gain attention across fintech subsectors
We’ll likely see B2B services such as banking-as-a-service, gain even more ground on the investor radar— not only in the payments space, but also in areas like insurtech, wealthtech, and regtech. We expect to see embedded finance continue to gain traction as organizations strive to integrate financial services with other environments.
6. Partnerships will be embraced by big techs and fintechs
Partnership models will be a critical means for companies looking to expand their service offerings. We’ll likely see partnerships emerging across the fintech sector — from wealthtech to insurtech — and involving a range of participants from the big techs and platform players to financial institutions and larger fintechs looking to add to their core services.
VC investments surge and cross-border M&A more than doubles all of 2020.
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To learn more about the analysis and topics raised in this edition, or to discuss your organization's unique fintech agenda and roadmap, please contact your local KPMG advisors or the contributors in this publication.