Cryptocurrencies and blockchain to remain hot areas of investment in 2022: KPMG

Total global fintech funding across M&A, PE, and VC reached USD210 billion across a record 5,684 deals in 2021. Fintech funding in H2’21 accounted for USD101 billion of this total – down slightly next to H1’21’s USD109 billion, according to the Pulse of Fintech H2’21 – a bi-annual report published by KPMG highlighting global fintech investment trends.

The largest fintech deals of H2’21 included the USD9.2 billion acquisition of Denmark-based payments processor Nets by Italy-based Nexi, the USD3.75 billion merger of fintech cloud platform company Calypso Technology and regtech AxiomSL to form Adenza in the US, and the USD2.7 billion acquisition of Japan-based Paidy by PayPal.

Payments continued to attract the most funding among fintech subsectors, accounting for USD51.7 billion in investment globally in 2021 – up from USD29.1 billion in 2020. A continued surge in interest in areas like ‘buy now, pay later, embedded banking and open banking aligned solutions have helped keep the payments space very robust. Blockchain and crypto were also a very hot sector, attracting a record USD30.2 billion in investment – up from USD5.5 billion in 2020 and more than three times the previous record of USD8.2 billion seen in 2018. Cybersecurity (USD4.85 billion) and Wealthtech (USD1.62 billion) also saw record levels of investment.

“2021 has been an incredibly strong year for the fintech market globally, with the number of deals soaring to record highs across the board. We’re seeing an incredible amount of interest in all manner of fintech companies, with record funding in areas like blockchain and crypto, cybersecurity, and wealth tech. While payments remain a significant driver of fintech activity, the sector is broadening every day,” Anton Ruddenklau, Global Fintech Leader, KPMG International

Crypto and blockchain space see the biggest surge in 2021 – with USD30 billion in investment

Global investment in the crypto and blockchain space rose dramatically from USD5.4 billion in 2020 to a record high of USD30 billion in 2021, while the number of deals rose from 627 to 1,332 over the same period. The sector also saw numerous large deals, including the USD1 billion raise by Bahamas-based FTX, a USD767 million raise by US-based NYDIG, and a USD750 million raise by Celsius Network. The surging investment and deal activity reflect growing recognition for the potential role of crypto and its underlying technologies in modern financial systems.

Both cybersecurity and wealth tech also reached record high levels of investment in 2021, with USD4.85 billion and USD1.62 billion respectively.

Cross-border M&A sees strong rebound with USD32.2 billion in deal value

After falling to a seven-year low of USD10.7 billion in 2020, cross-border fintech M&A deal value more than tripled year-over-year to USD36.2 billion in 2021. The number of cross-border M&A deals also reached a record high of 275 deals during the year. Both H1’21 and H2’21 saw robust activity. During H1’21, the London Stock Exchange acquired US-based Refinitiv for USD14.8 billion and US-based Nasdaq acquired Canada-based Verafin for USD2.7 billion, while in H2’21, Italy-based Nexi acquired Denmark-based Nets for USD9.2 billion and PayPal acquired Japan-based Paidy for USD2.7 billion.

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