Despite macro-headwinds related to geopolitical, supply chain, labor, and interest rate shocks (the latter materially contributing to reduced valuations), FinTech innovation continues to see strong funding levels (above records in 2019-’20) with public payment players demonstrating high growth and margins trading at 12x-15x forward revenue.
As FinTech companies compete with traditional financial services companies, technologies leveraging personalization, automation, and predictive analytics are gaining traction.
- Digital-only banks are expected to further disrupt traditional banking through greater personalization, flexibility, and customer experience
- FinTech players are likely to make increasing use of AI and ML for fraud detection and digital transformation
- Blockchain is disrupting the payment sector; giants such as Microsoft, AT&T, and Twitch have adopted blockchain technology to enhance payments
- FinTech players are increasingly harnessing DeFi, automated underwriting, and alternative lending (such as BNPL) for a seamless payment and lending experience for customers
- After a record year, the FinTech space took a breather during H1’22, with 174 private placements (vs. 303 during H1’21) averaging $97m per transaction. The most active investors since 2020 include Tiger Global, SoftBank, Sequoia, Accel, and Insight Partners, among others. While 2022 financings are down y/y, they remain above levels seen in 2019 and 2020