The global fintech industry had a progressive closing in the year 2021 when compared to previous years. The market had a tremendous increase in terms of venture funding to the tune of $210 billion according to a report by the renowned global auditing firm, KPMG.
KPMG is one of the big four professional accounting companies in the world. As part of its core services, the Amstelveen, Netherlands-based firm conducts research on matters peculiar to finance, most especially digital finance, one of the latest which focuses on venture funding in the fintech and crypto ecosystem.
In the year 2021, there was a notable investment in Venture Capital, Private Equity, and Mergers and Acquisition in the fintech space. There was significant growth in the blockchain and crypto industry as well as cybersecurity and wealth tech.
According to the report, global Venture Capital funding in the fintech space recorded a $115 billion input in 2021, surpassing the previous high of $53.2 billion set in 2018. From $5.4 billion in the pandemic year, 2020, to way over $30 billion in 2021, the investment in the blockchain market had a tremendous boom.
Private Equity firms were more active in 2021 in the funding terrain. The following deals were closed by PE firms in the US, NYDIG-$767 million, Mindbody-$500 million, and iCapital Network-$440 million, amongst many other PE firms in the UK, Brazil, Vietnam, and India.
The Mergers and Acquisition industry was not left out, with cross-border acquisitions, after a downturn in the previous year, sealed 275 deals amounting to $36.2 billion. This figure ranks out of $83.1 billion of the total value of M&A in the fintech space.
Growth Attracts Fuse From Regulators
According to the KPMG report, the growth in the global fintech funding in the blockchain and crypto ecosystem has attracted sanctions from regulators.
While China issued strict orders banning all crypto transactions going by the popularity of crypto in the country, Russia has also seemed to have joined the movement towards a new crypto crackdown with a series of proposals that seek to ban Bitcoin mining. A number of sovereign nations are also exploring avenues to ban crypto in their countries.
Despite several sanctions and bans on the use of cryptocurrency in some countries, the blockchain space is not slacking as it keeps attracting investors into the fintech market.
With the huge expansion in the digital finance world, it has become important for financial services firms to migrate from the traditional modes of banking to embracing the dynamic space of fintech. Banking firms that won’t adapt to the fast-paced trend in financial technology management systems stand a huge risk of losing out to the competition in the mid to long term.