Global fintech investment fell to a seven-year low in H2 2024 according to a recent report from KPMG, though the survey found that the payments sector has regained some momentum in the overall funding landscape.
KPMG’s latest ‘Pulse of Fintech‘ report showed that 2024 was an active year of investment and M&A in the payments sector in which ‘investor interest grew considerably’ during the second half, driven by falling interest rates across various countries.
A big year for payments, a slow year for fintech
The payments industry closed 2024 with $31bn in investment, massively from £17.2bn in 2023. Most of this was attributed to ‘defensive transactions’, ones focused on protecting the acquirer’s existing assets and market position instead of focusing solely on expansion.
KPMG highlighted private equity giant GTCR’s $12.5bn acquisition of a majority stake in US payments firm Worldpay in H1 and private equity firm Advent International’s $6.3bn takeover of Canadian firm Nuvei, which took the firm private, as the most notable examples of this.
“As predicted in H2’23, payments companies increasingly pursued consolidation and global expansion in 2024 as a means to achieve scale, with strategies shaped significantly by economic and regional factors,” KPMG’s report read.
“As a whole, the industry saw balanced divestitures and acquisitions as companies focused on enhancing their core strengths, expanding into new markets, and pursuing technology-driven growth.
“In H2’24, there was an increase in interest and acquisitions of companies looking to benefit from economies of scale, in addition to large companies looking to acquire niche providers to expand their offerings across their value chains.”
Geographically, Africa, South America, the Middle East, and Southeast Asia stood as the regions targeted most by investors and saw substantial M&A activity last year. In 2025, this trend looks set to continue.
Prominent financial markets are emerging in countries like Saudi Arabia and UAE, bolstered by substantial state support as Middle Eastern governments look for ways to diversify economies and become less reliant on fossil fuels.
Meanwhile, growing African economies like Nigeria and Kenya have shown a strong appetite for alternative payment methods (AMPs), instant payments and e-payments, which continue to catch investors’ eyes.
The same can be said for Latin America, with countries like Brazil, Peru, Chile and Colombia hosting vibrant local fintech and payments sectors, while the rollout of regulated betting markets in the likes of Brazil also presents a huge opportunity for payments companies.
Another notable trend observed by KPMG is the increasing number of banks engaging with the BNPL space, which has witnessed rapid adoption over recent years. When the success of firms like Klarna and Affirm is considered, it is hardly surprising that investment and commercial banks are interested in getting in on the action.
Could politics change fintech’s fortunes?
However, while payments enjoyed a lucrative year from an investment and M&A standpoint, fintech as a whole has struggled. Total fintech investment for 2024 stood at $95.6bn across 4.639 deals according to KPMG, down from £119.8bn in 2023 and $202.9bn in 2022.
This decline was evident across the year, with global investment dropping from $51.7bn in H1 2024 to $43.9bn in H2, with M&A activity and venture capital investment both dropping significantly.
KPMG has attributed this to elections in major jurisdictions, wider geopolitical conflicts and challenges, and macroeconomic conditions. It is certainly true that the decline in fintech investment last year coincided with a lot of instability and political uncertainty.
France, the UK and the US all had elections last year in June, July and November respectively, with the latter two resulting in a change in administration. Meanwhile, conflicts in Ukraine and the Middle East continued to rage, and generally speaking, most countries continued to face problems with rising inflation and stagnant growth.
For many investors and major companies, these conditions would not have come across as ideal ones in which to acquire new assets or undertake investment projects, with geopolitical and macroeconomic landscapes increasingly difficult to predict.
In 2025, there may be some hope for a reversal of this, with some light at the end of the tunnel for the Ukraine and Israel/Gaza conflicts – though as always negotiations have not been smooth.
Pro-crypto President Donald Trump’s inauguration has also prompted a lot of confidence around the crypto sector, both in the US and globally, which could translate into investment – though the impact of his policies on other areas of fintech and payments remains to be seen.
Meanwhile, the British government has been actively courting investment and is seeking to build up a good relationship with financial services.
“2024 saw fintech market participants weathering the ongoing storm of geopolitical and economic uncertainties, avoiding high-risk deals and focusing primarily on strategic and defensive plays,” says Anton Ruddenklau, Lead of Fintech and Innovation, Global Financial Services, KPMG International.
“But even in the tough times, we saw some positive activity — including solid year-over-year increases in investment in areas like payments, regtech, and digital assets and currencies.
“The uptick in investment in Q4’24 is also an optimistic sign heading into 2025, although investors will likely remain cautious for some time.”
