The newly-released Pulse of Fintech H2’23, a bi-annual report published by KPMG, reports that total global fintech investment dropped in 2023 from US$196.6 billion across 7515 deals in 2022 to a six-year low of US$113.7 billion across 4547 deals.
The report notes that global M&A (mergers and acquisitions) deal value declined from US$98.2 billion in 2022 to US$56.4 billion in 2023, and that global VC (venture capital) investment fell from US$88.8 billion to US$46.3 billion in the same period.
Australia reflected the global trend, experiencing a 76 per cent drop in fintech deal value in 2023 to US$587.5 million, while the deal count fell by a third to 95 transactions.
Notable Australian fintech deals tracked by the report include taxi payment platform operator A2B’s acquisition by Singapore-listed transportation firm ComfortDelGro for $109.5 million, and deferred payment loan provider Midkey raising US$50 million in early-stage venture capital. In addition, one of Australia’s leading robo-advisers, Stockspot, was acquired by Korean firm Mirae Asset Global Investments, while Rich Data Co. raised US$17.5 million and SME lender Lumi raised an additional US$15 million.
Dan Teper, Head of Fintech at KPMG Australia, said that 2023 was a challenging year for the Australian fintech ecosystem, with both total deal value and deal count experiencing a sharp decline compared to previous years.
“The local market, as with the majority of global markets, has been impacted by a number of challenges including, but not limited to, a higher inflation and corresponding higher rates environment, and a change in overall risk appetite amongst investors,” Teper said.
“Looking ahead, we expect fintech growth in Australia to continue to be modest, and with interest rates unlikely to shift materially in the near term, funding and availability of capital are likely to remain a key challenge for local players,” Teper warned.
Given the ongoing global conflicts, current high interest rates in place, and the continued lack of exits, fintech investment is expected to remain soft for the rest of the first quarter of 2024. However, as interest rates are expected to stablise, and possibly decline, investment could begin to pick up. AI and B2B solutions will likely remain big tickets for investors, and M&A activity could also start to rebound as investors more seriously look at distressed assets.
