2023 has been a difficult year for the fintech market globally. Both total fintech investment ($113.7 billion) and number of fintech deals (4,547) were the weakest results since 2017.
Fintech investors are becoming increasingly cautious about their investments as a storm of global challenges – from high interest rate environments and chronic inflation in many countries to conflicts in Ukraine and the Middle East – combine with concerns about valuations and a barren exit environment.
Year-over-year declines in fintech investment occurred across all major regions, with APAC experiencing the largest decline, from $51.3 billion in 2022 to $10.8 billion in 2023.
In EMEA, investments fell from $49.6 billion to $24.5 billion over the same period.
The Americas showed the greatest resilience, with fintech investment declining from $95.4 billion in 2022 to $78.3 billion in 2023.
At the jurisdictional level, the United States attracted two-thirds ($73.5 billion) of all fintech funding in 2023.
The payments space continued to account for the largest share of fintech funding among fintech subsectors, despite declining from $57.9 billion to $20.7 billion between 2022 and 2023.
Among the major fintech subsectors, only proptech and insurtech saw overall investment increase year-over-year, with proptech investment increasing from $4.1 billion to $13.4 billion and insurtech investment increasing from $5.9 billion to $8.1 billion.
From a technology perspective, despite the decline in funding in 2023, AI remained the clear leader in fintech investments, attracting over $12.1 billion.
Looking at both 2023 as a whole and the second half of 2023 in particular, fintech investor sentiment can be characterized as subdued.
2023 has been a challenging year as seen across the fintech sector over the past six months.