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Europe’s fintech space is fiercely competitive, with tens of billions of dollars of privately held startups vying to take market share from established banks.
Oscar Wong | Moment | Getty Images
The fintech industry suffered further hardship in 2023, with overall investments halving as rising interest rates and worsening macroeconomic conditions tightened investors, according to global investment statistics shared exclusively with CNBC. That’s what it means.
Investment in fintech fell by $51.2 billion last year, a 48% drop from 2022, when total investment in the sector was $99 billion, according to data from financial technology industry group Innovate Finance. . The total number of fintech funding deals also fell significantly, from 6,397 in 2022 to 3,973 in 2023, a 61% decrease.
Yet, despite the decline, the United Arab Emirates stands out on Innovate Finance’s list when it comes to financing. In the UAE, total investments soared 92% in 2023 due to the impact of fintech-friendly regulations and the growing adoption of digital banking and other tools in the region, according to Innovate Finance.
This is the first time the UAE has featured in the top 10 list of most well-funded fintech hubs in 2023, according to Innovate Finance. The group noted that more Asian and Middle Eastern countries made it into the top 10 last year than European countries, as some of Europe’s major economies, such as France and Germany, dropped in the rankings.
Innovate Finance CEO Janine Hart told CNBC earlier this week that “some markets are now adopting this technology, and we’re seeing that reflected in the amount invested.” ” he said. Mr Hart noted that momentum in Asia and the Middle East presents an opportunity for the UK to strengthen cooperation and partnerships with countries in those regions. “We’re seeing appetite and real momentum from many of our locations in Asia,” she said.
Regarding the economic slowdown, Hart noted that growth-stage companies are most likely to be affected by a funding downturn in 2023, while seed- and early-stage companies are less susceptible to such pressures. .
“If you’re a later-stage company, you might not be looking to get a raise right now,” said the CEO of Innovate Finance, noting that early-stage fintech companies raised about $4 billion in the market last year and are more likely to He added that he had a good time. “That’s a really positive sign,” she added.
“The evidence of the strength of our sector is that deal sizes are very healthy,” Hart said. “Globally and in the UK, seed, series A and B fintech investment is normalizing, which is a testament to the strength of investors,” she added.
Amid widespread uncertainty impacting financial markets, including escalating conflicts between Russia and Ukraine, Israel and Hamas, continued geopolitical tensions between the United States and China, and rising interest rates, financial technology has For months, I have been exposed to dark situations.
According to the International Monetary Fund, global economic growth is expected to slow from 3.5% in 2022 to 3% in 2023.
Innovate Finance also announced that the UK will become the second largest hub for fintech investment in 2023, with total funding for the country’s financial technology industry reaching $5.1 billion in 2023, up 63% from $13.9 billion in 2022. He pointed out that it had decreased.
According to Innovate Finance, the UK has received more fintech investment than the next 28 European countries combined.
London’s fintech companies raised $4.5 billion last year, and London continues to dominate when it comes to fintech funding in broader Europe.
But overall funding has also fallen in the UK capital, falling by 56% from 2022.
Meanwhile, according to Innovate Finance, UK female-led fintech companies closed 59 deals worth $536 million a year, accounting for 10.5% of the UK total. calls it a “step forward” for female founders and leaders.
“At the end of the day, I think the UK is still a world leader in fintech,” Hart told CNBC. It’s Europe’s leader. ”
But “we cannot rest on our laurels. It is important that we build on the momentum of recent years. We need effective, efficient and proactive government support and regulation. ” he added.
“The focus for us going forward is to ensure we have the right regulations in place to enable fintechs to thrive and enable small and medium-sized businesses to grow.” [small to medium-sized enterprises] All parts of the country can benefit from these new innovations. ”
“We are working on new stablecoin regimes, crypto regimes, open banking and finance initiatives. These are all areas where we expect to see progress in 2024.”
Unsurprisingly, the US was the largest country for fintech investment, with total investment of $24 billion, but fintech companies raised 44% less in 2023 compared to a year ago. Funding levels continued to decline from 2022.
India is in third place after the UK, with India expecting $2.5 billion worth of fintech investment last year, Singapore in fourth place with $2.2 billion and China in fifth place with $1.8 billion.
In 2023, the value of the world’s top five largest deals exceeded $9 billion, representing about 18% of total global space investment.
According to the data, Stripe raised the most cash with $6.9 billion, while Rapyd, Xpansiv, BharatPe, and Ledger secured the second, third, fourth, and fifth largest investment deals, respectively.
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