Fintech´s sector global outlook
KPMG provides a global overview of the Global Fintech market during the first half (H1´22) of the year 2022 and trends to watch for the second half of the year (H2´22). According to the report, the H1´22 showed shifting dynamics in the sector as optimism seen at the end of 2021 quickly transformed into concerns about economic uncertainties related to the Russia-Ukraine conflict, ongoing supply chain challenges, and rising inflation and interest rates. This is causing value corrections and lower investments in the global sector.
- Although global investment evolution in fintech fell from $111.2 billion in H2’21 to $107.8 billion in H1’22, investment in the payments space remained very strong in H1’22, accounting for $43.6 billion compared to the $60.3 billion seen during all of 2021.
- Key trends of the fintech sector for the second half of the year 2022:
‑ Valuations continuing to adjust as cost of capital increases: As interest rates continue to rise; capital will become more expensive. This will have an impact on valuations and will drive investors to enhance their focus on cash flow, top line revenue growth and profitability.
‑ M&A will increase as corporates and investors look for bargains given the downward pressure on valuations.
‑ Interest in cybersecurity automation to improve cybersecurity management will keep growing on the radar of most companies.
‑ B2B solutions, meant to help companies become more efficient or enable them to expand their value propositions, will become more attractive to investors in an economic slowdown context.
- Crypto and blockchain investments will increasingly focus on infrastructure: While investment in cryptocurrencies is expected to slow down further, there will likely be a continued focus on the use of blockchain in financial market modernization.