Global Fintech reaches $210 billion to close out 2021
What an incredible finish to the year for the fintech market globally. As you’ll see from this edition of Pulse of Fintech, there was significant investment across VC, PE, and cross-border M&A. We saw growing deal sizes in a wide variety of fintech subsectors — from crypto and blockchain to wealthtech and cybersecurity. If there was a word that could be used to describe 2021, it would be: expansion.
Global VC investment soars to new high of $115 billion
VC investment globally reached a record $115 billion in 2021, surpassing the previous high of $53.2 billion set in 2018. Corporate VC-related investment accounted for $50 billion of this total — more than double the $24 billion seen in 2020. The year saw a record seven fintech-focused VC funding rounds over $1 billion, including five in H2’21 — all in the Americas: a $2 billion raise by US-based Generate, a $1.1 billion raise by Brazil-based Nubank, a $1.1 billion raise by US-based Chime, and a $1 billion raise by Bahamas-based FTX. The largest VC rounds in EMEA during H2’21 consisted of a $900 million raise by Germany-based N26 and Sweden-based Klarna’s $1.2 billion VC raise in H1’21.
Blockbuster year for crypto and blockchain, with $30 billion in investment globally
Investment in the crypto and blockchain space soared in 2021, rising from $5.4 billion in 2020 to over $30 billion. Globally, there was an incredible increase in the level of recognition for the potential role of crypto and its underlying technologies in modern financial systems. Increasing activity in the space has also sparked further action from central banks, some of which are considering the development of digital currencies in the footsteps of the digital yuan in China. It has also sparked increasing scrutiny from regulators; in H2’21, China completely banned crypto mining and trading, while India made the first moves to follow suit. Other countries, meanwhile, have continued to highly support development and solutions in the space.
Increasing focus on core banking replacements
Globally, financial institutions are under significant pressure to reduce their reliance on legacy infrastructure and improve their core banking systems in order to facilitate better customer experiences leveraging the cloud. Over 2021, there has been a surge in interest in fintechs able to help with such activities, particularly from Tier 1 banks.
Growing interest in data connectivity and analytics
During 2021, there was growing interest in fintechs able to help companies master their data and turn it into better decision-making — whether for lending, insurance, or AML and fraud prevention. During H2’21, UK-based Quantexa raised $153 million in Series D funding to support expansion of its AI and machine learning driven contextual decision intelligence solution.
‘Buy now, pay later’ space seeing large deals across jurisdictions
The BNPL space saw robust investment throughout 2021, ranging from Klarna’s $1.2 billion VC raise in H1’21 to PayPal’s acquisition of Japan-based Paidy for $2.7 billion in H2’21. During H2’21, Block (formerly Square) also announced a $29 billion acquisition of Australia-based Afterpay. The deal — the largest M&A in corporate history in Australia — is expected to close in 2022.
PE investment in fintech space more than doubles previous high
Globally, PE firms were more active in the fintech sector than ever before in 2021, with a record 144 deals accounting for over $12 billion in investment — twice the previous high of $5 billion in 2018. Building on a strong H1’21, H2’21 saw a number of large PE deals in the US (NYDIG – $767 million, Mindbody — $500 million, iCapital Network - $440 million), the UK (Genesis Digital Assets - $431 million, DivideBuy - $413 million), Brazil (Provo - $251 million), Vietnam (Vietnam Payment Solution - $250 million), and India (Vastu Housing Finance - $200 million).
Download Pulse of Fintech H2’21
VC investment soars and M&A makes a big comeback.
Download this edition for:
- global and regional analysis with key investment data and insights
- top fintech trends for 2022 and beyond
- interviews with Quantexa and Thought Machine
- fintech segment insights for a deeper dive into payments, insurtech, regtech, wealthtech, cybersecurity, blockchain and cryptocurrency
- spotlight articles on emerging markets: LATAM and Africa.
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.