Fintech booms in 2021 - Europe fastest growing in fintech investment
Global fintechs raised $210 billion through 5,684 investment rounds in 2021: a record, according to KPMG's recent 'Pulse of Fintech H2 2021' report.
Europe and the Middle East (EMEA) attracted more than one-third of the total investment amount, a whopping $77 billion. This triples the region's figure for fintech investment in 2020($26 billion) and beats the other regions in terms of growth. The U.S. and Asia separately only achieved nearly double the 2020 figure. Fintech is thus overwhelmingly booming in Europe.
The UK remains the leader for fintech investments with over $37 billion, followed by Scandinavia which smoothly reaches $18 billion.
We saw mega rounds in Europe with, for example, the acquisition of Refinitiv by the London Stock Exchange ($14.8 billion). Denmark's Nets, which was acquired by Nexi of Italy ($9.2 billion), shows the popularity of the payments sector. In 2021, that sector grew to $51 billion globally; up sharply from $29 billion in 2020. Payments players are feeling the pressure from big tech and innovative challengers and are opting for expansion and consolidation. Furthermore, deferred payment (buy now pay later, BNPL) is defining the payments sector. Sweden's Klarna, the undisputed BNPL leader, experienced faster growth in its customer base than other players and fueled its bank account with more than $1.6 billion in additional capital. According to some analysts1, after almost 70% growth in 2020-2021, BNPL volumes in Belgium are expected to grow 27% annually until 2028.
Blockchain and crypto are undeniably the biggest sector growth driver. A phenomenal 30 billion was raised: almost six times the 2020 amount ($5.4 billion). The 3-year-old French Sorare raised $680 million for its NFT marketplace for soccer fans. But interest in blockchain is also growing in Belgium with Belgian blockchain venture fund Tioga Capital raising about $70 million late last year. Traditional financial institutions and regulators worldwide are exploring the opportunities and risks of digital currencies (CBDCs) and blockchain technology underlying 'digital assets' (see for example MiCA and the European Commission's Digital Finance Package). We’re curious as to how to safely bridge the gap between the traditional financial world and the phenomenal growth of decentralized finance, estimated at $120 billion at the end of December 2021.2
Fintechs are finding more and more breeding ground in Belgium. Today, there are about 320 fintech startups in our country3 with an ecosystem supported by leading players such as Euroclear, Mastercard, Worldline, Isabel and SWIFT. It’s also interesting to see very active startup programs for fintechs of the banks with financial institutions increasingly noticing the added value of partnerships with specialized fintechs.
Unicorns like Collibra, one of the top global companies in data management, make local entrepreneurs dream. Funding for fintechs no longer happens only through classic loans or through funds, such as PMV, but is further encouraged by local and international fintech funds. Large U.S. players such as Sequoia, Bessemer and Lightspeed, are setting up more and more local offices in Europe to be able to respond faster to opportunities.
"The pandemic has not only accelerated digitization in the financial sector but has also made fintech funding more international in Europe. European fintechs are increasingly being discovered by, for example, large U.S. venture funds." says Dave Remue, Head of Fintech at KPMG Belgium.
- More info about this study
- Pulse of Fintech H2'21 - Report
- Pulse of Fintech - EMEA focus
1 Belgium Buy Now Pay Later Market Report 2021: BNPL Payments are Expected to Grow by 68.7% to Reach $1.284 Billion in 2021 - Forecast to 2028 - ResearchAndMarkets.com | Business Wire
2 Total Value Locked in DeFi according to Dappradar.com
3 https://tracxn.com/explore/FinTech-Startups-in-Belgium
KPMG in Belgium
KPMG is a global network of professional services firms in audit, tax and consulting. Through helping other organizations mitigate risks and grasp opportunities, we can drive positive, sustainable change for clients, our people and society at large. KPMG firms operate in 145 countries and territories, and in FY21, collectively employed more than 236,000 people, serving the needs of business, governments, public-sector agencies, not-for-profits and through KPMG firms' audit and assurance practices, the capital markets. KPMG is committed to quality and service excellence in all that we do, bringing our best to clients and earning the public's trust through our actions and behaviors both professionally and personally. We lead with a commitment to quality and integrity across the KPMG global organization, bringing a passion for client success and a purpose to serve and improve the communities in which KPMG firms operate. In a world where rapid change and unprecedented disruption are the new normal, we inspire confidence and empower change in all we do. In addition to tax, legal, audit and advisory services, KPMG in Belgium also offers specific advice to family businesses.
