Follow the Money: Back to the Basics

Abstract

According to KPMG, there was over US$210 billion invested in global FinTech with over 5684 deals in 2021 (KPMG Pulse, 2022), which doubled 2020’s numbers of US$105 billion invested in 2861 deals (KPMG Pulse, 2021). This tells us two things. First, despite COVID-19 and its many variants troubling the globe, FinTech has made its way back, strong, and square. Second, with record deals and a record amount of money invested in FinTech, it is clearer than ever that FinTech is the future for both Financial and Technology businesses in the financial services industry. For financial and technology companies to survive and thrive, they have to respond swiftly and robustly to the inevitable trend of transformation to FinTech. By studying FinTech investment deals in the past two years, we have discovered that the development trend has gone through three main phases—from payments, to embedded finance, and to Public–Private Artificial Intelligence. Along with this trend, both business practices and related investments have shown a stronger tendency of matching and focusing with clearly defined positioning that is better aligned with resources. The areas of major focus include payments, insurtech, regtech, wealthtech, blockchain and cryptocurrency, and cybersecurity. As more and more FinTech businesses have realized the value in the aforementioned areas and are promoting opening and cooperating practices, risk control has also become more important a task, not just for FinTech businesses, but for regulators as well. This is another trend in which we are witnessing growing levels of cooperation and collaboration between the public and private sectors. In summary, all recent efforts we have seen in the FinTech sector are pointing in one direction: credibility, which happens to be the basis of finance. In this chapter, we will attempt to reveal the “secret equation” which governs this money invested, as well as the targets which have attracted such large sums. Analyzing this will help us better understand how the FinTech sector has evolved and what to expect for the future.