Pulse of Fintech H2 2020 – Global insight Pulse of Fintech H2 2020 – Global insight Pulse of Fintech H2 2020 – Global insight

Amidst the pandemic, fintechs attracted US$42.3 billion in VC investment, in a year that ended second only to 2018 — when Ant Financial raised US$14 billion in the world’s largest private financing round ever. US-based wealthtech Robinhood attracted the largest VC investment in H2’20, raising US$1.3 billion across two deals in H2’20: a US$600 million raise in July and a US$668 million raise in October.

Digital banks attracted a number of VC mega rounds in H2’20, with Sweden-based digital bank Klarna raising US$650 million, Revolut raising US$580 million, and US-based Chime raising US$533.8 million. 

In H2’20, fintech unicorns were born in the US (Next Insurance, Chainalysis, Better.com, Forter, and others), China (Waterdrop), Canada (Wealthsimple), India (Razorpay), the Netherlands (Mollie), and Brazil (Creditas). Two countries also saw their first fintech unicorns: Saudi Arabia (STC Pay) and Uruguay (dLocal). The diversity of these unicorns is a testament to the rapidly evolving global fintech ecosystem.

M&A activity grew from US$10.9 billion in H1’20 to over US$50 billion in H2’20 — led by the US$22 billion acquisition of TD Ameritrade by Charles Schwab. Increasing M&A activity in the US drove the rebound, with the US accounting for nine of the top ten M&A deals, including TD Ameritrade, Credit Karma (US$7.1 billion), Vertafore (US$5.3 billion), Iberia Bank (US$2.5 billion) and Avaloq (US$2.2 billion).

Fintech was a priority for governments and regulators around the world in 2020. During H2’20:

• The People’s Bank of China began a real-world trial in one district of Shenzhen in October for its central bank digital currency – the digital renminbi.
• The Monetary Authority of Singapore issued its first two digital banking licenses to the Grab-Singtel consortium and to tech giant SEA, in addition to two digital wholesale bank licenses to Ant Group and a consortium including Greenland Financial Holdings Group Co. Ltd, Linklogis Hong Kong Ltd, and Beijing Co-operative Equity Investment Fund Management Co. Ltd.
• A group of central banks, including the Federal Reserve, European Central Bank and Bank of England set out a framework and requirements for offering central bank digital currencies.¹

Corporate participation in venture investment in fintech was incredibly strong in 2020, helping drive US$21 billion globally, including over US$9 billion in H2’20. Over the next couple of years, corporate investment is expected to grow significantly as more legacy firms continue to take action on the wake-up call provided by COVID-19 by undertaking acquisitions, making CVC investments and forging collaborative partnerships.