The global fintech market attained a value of more than USD 140 bn, according to Beinsure Media report about Fintech Unicorns. The market is further expected to grow in the forecast period of 2023-2028 at a CAGR of 11.9% to reach over USD 267 bn by 2027.
Too many fintech companies went public in 2021 with high valuations, only to see their share prices drop in 2022-2024.
The FinTech sector saw a surge in mergers and acquisitions (M&A) in 2024. Companies aimed to expand their market share and integrate advanced technologies. Key drivers included the desire to enhance digital capabilities and meet customer demands.
“Private equity and venture capital investment in financial technology and payments companies in Europe has been overshadowed by the $10 bn invested in US companies in the first five months of the year,” says Oleg Parashchak, CEO of Finance Media Holding. “Fintech, or financial technology, enhances or automates financial services and processes.”
Several high-profile acquisitions marked the year. Leading firms acquired startups to bolster their service offerings and enter new markets. These moves highlighted a focus on expanding digital payment solutions, blockchain technology, and cybersecurity measures.
Regulatory considerations played a crucial role. Companies navigated complex legal frameworks to finalize their deals. This aspect emphasized the importance of compliance and strategic planning in M&A activities.
Overall, 2024 was a transformative year for FinTech. The sector witnessed dynamic changes driven by M&A activities, pushing the boundaries of financial innovation and customer service enhancements, according to FinTech Sector M&A Deals Report.
Despite economic uncertainties like inflation and geopolitical tensions, the fintech sector showed resilience and growth in 2023. Increased adoption of digital financial services by consumers and businesses drove this growth, according to Beinsure Data.
While investment in fintech startups fluctuated due to market conditions, sectors like payments, regtech, and insurtech continued to attract significant funding. Investors focused on technologies that enhance financial inclusion, streamline regulatory compliance, and offer innovative insurance products.
Artificial Intelligence (AI), blockchain, and open banking remained key technological drivers. AI and machine learning (ML) were widely used for personalized financial services, risk assessment, and fraud detection. Blockchain technology gained traction in payments, remittances, and decentralized finance (DeFi). Open banking initiatives promoted innovation by enabling seamless data sharing between institutions and third-party providers.
Regulators worldwide focused on ensuring the stability and integrity of the evolving fintech ecosystem. This included measures to enhance consumer protection, ensure data privacy, and manage risks related to digital assets and cryptocurrencies. The regulatory environment remained crucial in shaping fintech innovation and adoption.
According to equity analysts, sentiment among sellers could improve in 2024, with many smaller publicly traded fintech companies, especially in the payments sector, being attractive to private equity firms or larger corporate players.
The slowdown is not a result of companies losing M&A interest, but rather a sign that the market has accumulated a backlog of companies seeking to sell or raise capital, dealmakers said.
Potential sellers on the sidelines are mainly gauging the right timing, waiting for more favorable valuations.
Sellers are now testing the market. Some sellers have an incentive to explore deals to avoid a potential rush of M&A when the deal backlog clears.