Dear Pro member,
McKinsey’s latest report on global fintech funding reveals a significant shift in the industry’s trajectory. After a remarkable 177% YoY increase in 2021, fintech funding experienced a 40% YoY decline from US$92 billion to US$55 billion in 2022, largely attributed to a market correction. Despite this drop, over a five-year period, fintech’s share of total VC funding remained relatively stable at 12%, with only a marginal 0.5% decrease in 2022.
The report identifies the industry’s transition into a new era marked by a more conservative approach. Fintechs are moving away from the previous trend of rapid growth at all costs and embracing a slower, steadier pace. This shift is necessary due to the challenging and uncertain macroeconomic environment, fewer IPOs, and a decline in new unicorn creation.
Furthermore, the report emphasizes the growing influence of emerging markets, such as Asia Pacific (excluding China), Africa, Latin America, and the Middle East, in fueling fintech revenue growth. These regions represented 15% of global fintech revenues in 2022, with an estimated increase to 29% by 2028.
In addition, the report highlights the significance of generative AI in banking and suggests that fintech firms should focus on talent strategy and change management to harness the additional revenue potential it offers. Despite the funding decline, the fintech industry is still thriving, with publicly traded companies and unicorns demonstrating substantial growth, pointing to its continued importance in the financial sector.
Sainul,
Editor.
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Despite decline, global fintech funding remains fairly stable: report
According to the McKinsey report, global fintech funding declined 40% YoY to US$55B after a 177% rise YoY in 2021; However, on a five-year period, fintech funding as a proportion of total investment remained stable at 12%.
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The image used in this article is AI-generated.
The post Ecosystem Roundup: Global fintech funding sees 40% drop in 2022; YouTrip nets US$50M; Kopi Kenangan co-founder launches new fund appeared first on e27.