Total global fintech funding across M&A, PE and VC reached US$210 billion across a record 5,684 deals in 2021, according to the Pulse of Fintech H2’21 – a bi-annual report published by KPMG highlighting fintech investment trends. Investment in fintech companies in Europe, Middle East and Africa (EMEA) touched $77.4B across 1,859 deals.
The fintech ecosystem in the Middle East also continued to evolve, with a $75 million raise by Bahrain-based Rain and a $50 million raise by UAE-based Tabby in H2’21. In the UAE, fintech VC, PE, and M&A activity saw significant growth this year. The UAE continues to foster an environment that encourages and celebrates innovation in fintech.
Goncalo Traquina, Head of Management Consulting, KPMG Lower Gulf, said: “The UAE government has moved forward with a number of initiatives to foster the growth of fintech. Cryptocurrencies and blockchain are expected to retain their appeal to investors in 2022, as increasing numbers of crypto firms seek regulatory guidance to grow and develop the sector. While much of fintech investment in the UAE has been focused in the digital banking and payments space, lending is projected to grow on the back of AI and machine learning being deployed to improve credit risk assessments.”
The Innovation Hub in DIFC allocated about USD 100 million to help start-ups grow through its ‘Fintech Fund Accelerator Program’. In October 2021, the Central Bank of the UAE (CBUAE) signed an agreement with Dubai International Financial Centre (DIFC) at Expo Dubai to enhance collaboration under their co-sandbox program for fintechs. These, combined with start-up funds, are likely to be a big part of developing the UAE’s fintech ecosystem over time.
Payments continued to attract the most funding among fintech subsectors, accounting for US$51.7 billion in investment globally in 2021 – up from $29.1 billion in 2020. A continued surge in interest in areas like ‘buy now, pay later’, embedded banking, and open banking aligned solutions has helped keep the payments space very robust.
Blockchain and crypto was also a very hot sector, attracting a record US$30.2 billion in investment – up from US$5.5 billion in 2020 and more than three times the previous record of US$8.2 billion seen in 2018. Cybersecurity (US$4.85 billion) and Wealthtech (US$1.62 billion) also saw record-levels of investment.
The largest fintech deals of H2’21 included the US$9.2 billion acquisition of Denmark-based payments processor Nets by Italy-based Nexi, the US$3.75 billion merger of fintech cloud platform company Calypso Technology and regtech AxiomSL to form Adenza in the US, and the US$2.7 billion acquisition of Japan-based Paidy by PayPal.
2022 Fintech Trends to Watch in EMEA
- Increasing investment in decentralised finance and a stronger push for the development of a common regulatory framework for crypto
- Fintechs looking to expand their footprint across the EU—and beyond
- Growing fintech deal sizes in the Middle East and Africa – primarily in the payments space
- Increasing interest in B2B fintech solutions and business models
- Increasing focus on IPO opportunities as investors in mature fintechs look to exit
You can find the full report here.