Over 90% of fintech leaders globally believe robust industry investment levels will return within the next 12 months.
A survey of fintech leaders conducted by Silverflow, a cloud platform for global card processing, revealed that 91% of fintech leaders believe investment growth will get on the mend again next year after a significant drop observed over the past few years.
The survey was completed at Money 20/20 Europe in Amsterdam, the Netherlands, in June 2024. Respondents included market leaders such as Visa, Mastercard, American Express, Adyen, Worldpay, Barclays, and Lloyds Bank Group; as well as numerous smaller start-up and scale-up fintech companies.
Global fintech investments started to rise significantly in the 2010s, with innovative startups receiving billions in venture funding and becoming unicorns. Industry financing more than doubled between 2017 and 2018, reaching $148 billion. It kept rising meteorically until 2020, when the investment levels got hit by the pandemic.
Fintech investment managed to rebound to $225 billion in 2021, but in 2023, the industry funding fell to $113 billion, a 42% decline from the previous year.
One of the main reasons is continuing interest rates hikes. They increase borrowing costs and leave less money to invest. Besides, due to global political and economic uncertainty, many investors shifted their focus to safer traditional industries and assets rather than aspiring challengers and disruptors.
At the same time, investors don’t fully give up on the fintech segment. Instead, they are changing their investment strategies.
Robert Kraal, co-founder and CBDO of Silverflow, commented: “…investors are adjusting their strategy from investing in large numbers of companies in the hope or expectation, that some will become ‘unicorns’ to finding a smaller number of companies who are likely to turn a sustainable profit rather than chase infinite growth.”
The survey findings also highlighted major industry trends for the coming year – instant payments, open banking, and artificial intelligence (AI) – as well as the challenges that fintech companies face. At present, high fees and associated costs are the most common problem for businesses in the payments space, with 39% of respondents citing the issue. Lack of data and poor customer experience come close, gaining 26% of the votes each. Other factors like difficulty in using a payment service and lack of functionality came in far behind.
