Pulse of Fintech H1 2021 – Global

What an incredible start to the year for the fintech market globally. As you’ll see from this edition of Pulse of Fintech, the rebound we saw in H2’20 continued into H1’21, with very robust investment across VC, PE, and venture capital. We saw growing deal sizes in a wide variety of fintech subsectors — from wealthtech and regtech to crypto and cybersecurity. If there was a word that could be used to describe H1’21, it would be: diversity.

Global fintech investment continued its remarkable rebound in H1’21, rising from $87 billion in H2’20 to $98 billion in H1’21. Fintech deal volume hit a new record of 2,456 during H1’21. A wealth of dry powder, an increasingly diverse range of fintech hubs and fintech subsectors, and robust activity in almost all regions of the world contributed to the strong start to 2021.

There was $21 billion in corporate-affiliated VC investment in H1’21. CVC deal volume reached a high of 284 in Q1’21, and then grew further to 312 in Q2’21. Corporates around the world are under pressure to increase the velocity of their digital transformation activities and to enhance their digital capabilities. Over the last year, many have seen that it’s quicker to do so by partnering with, investing in, or acquiring fintechs, particularly with respect to high demand skills.

The Americas accounted for $51.4 billion of fintech investment in H1’21, with the US accounting for $42.1 billion. Investment in the EMEA region was also very robust at $39.1 billion. In the Asia-Pacific region, fintech investment rose considerably between H2’20 and H1’21 — rising from $4.5 billion to $7.5 billion, although investment remained suppressed compared to previous record highs. 

Cross-border M&A deal value rose dramatically — from $10.3 billion in all of 2020 to $27.7 billion in H1’21 alone. Following a pandemic-driven slowdown in cross-border M&A, many incumbents and mature fintechs embraced cross-border M&A as a means to gain critical mass at a regional or global level or to expand services and capabilities.

Large fintechs and platform companies have focused on building up their platform or ‘super app’ models, including embracing solutions like embedded finance in order to provide a stronger ecosystem of services. This is particularly true in Southeast Asia; in H1’21, Gojek announced a merger with marketplace Tokopedia —in part to better compete with super apps such as Grab¹ and mitigate any competitive threat from SEA Limited.

Big techs have continued to move into the banking space to create an extended experience for their customers or to remove friction points in processes — primarily by forging partnerships with existing banks. Most recently, Google announced partnerships with a number of banks and credit unions — including Citi, BBVA, Bank of Montreal, Stanford FCU and others — to provide Google Plex digital bank accounts integrated with Google Pay.

VC investments surge and cross-border M&A more than doubles all of 2020.

Download this edition for:

• global and regional analysis with key investment data and insights
• top fintech trends for 2021 and beyond
• interview with Jason Pau, Chief of Staff, International to the Chairman, Ant Group
• fintech segment insights for a deeper dive into payments, insurtech, regtech, wealthtech, cybersecurity, blockchain and cryptocurrency
• spotlight article, Putting big data at the heart of decision-making.

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.