Global fintech funding falls in 2023

KPMG’s latest Pulse of Fintech report showed a drop in funding and the number of deals

Global fintech funding fell during the first half of 2023, with both total funding and the number of deals dropping.  

Total funding fell from $63.2b across 2,885 deals in the second half of 2022, to $52.4b across 2,153 deals in the first six months of this year, KPMG’s latest Pulse of Fintech report showed.  

This drop has been driven by high inflation, rising interest rates, the war in Ukraine, and challenges currently faced by the tech sector—depressed valuations and a lack of exists. The collapse of several US banks early in 2023 hasn’t helped.  

However, certain sectors in fintech fared fairly well. Supply chain and logistics-focused fintechs attracted $8.2b, above the space’s 2019 annual record of $5.5b. 

Green fintech attracted $1.7b in the first half of 2023, ahead of the $1.5b it received during the whole of last year. And payments remains the top fintech subsector, with $16b in funding. 

At a regional level, the Americas saw fintech funding climb from $28.9b in H2’22 to $36.1b in H1’23. 

In contrast, the EMEA region saw fintech funding fall by more than 50%. Funding also dropped in the ASPAC region. 

The decline in funding did not come as a surprise to Judd Caplain, global head of financial services at KPMG, given the current pressures on the market. 

But there are positives to be found, particularly in the subsectors. Caplain commented: “The long-term business case for many subsectors within fintech remains very strong—particularly for sectors like payments, insurtech and wealthtech. Once market conditions begin to even out, funding will likely rebound.” 

One area that is likely to attract attention for the rest of 2023 is the use AI in financial services. Anton Ruddenklau, global fintech leader at KPMG, said: “Looking forward, it is an area that is attracting enormous interest and funding—particularly in areas like cybersecurity, regtech and wealthtech.  

“Over the next six months, we’ll start to see an uptick in investors embracing the space as corporates demand ways to leverage generative AI effectively.” 

Image: © bluebay2014 via Canva

Josh Poyser Josh Poyser is an editor at FinTech Intel. He has written about fintech for several years and appeared at FinTech Connect 2023 on the 'Unlocking Success: The Art of Fintech PR' panel.