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While global M&A has suffered in 2023, the Fintech sector saw M&A activity rise sharply this year, with 591 deals recorded. FinTech segment has the potential to pick up in 2023, and there is no shortage of smaller publicly traded biggest" target="_blank" rel="noopener noreferrer">https://beinsure.com/ranking/biggest-fintech-unicorn-startups-in-world/">biggest fintech companies — particularly in the payments sector — that private equity firms or larger corporate players can covet. According to data compiled by Beinsure Media, from January through June 2023, the global fintech sector recorded 128 M&A transactions, compared to 248 in the first half of 2022 and 188 in the second half of 2022.

The maximum possible score in the rating is 1000. When assigning points, the presence of the Internet, the number of mobile devices, legislation in the region, innovations, and the volume of investments attracted earlier are taken into account. This rating allows not only assessing the current situation in the regions and predicting the development of the fintech industry, but also highlighting areas that are attractive in terms of the development of fintech startups.

1. North America is the region with the most developed fintech industry. The USA, Canada, Mexico collected $7.9 billion of investments in total in 2017. According to experts' forecasts, the market will continue to grow by 15-20% per year. The average fintech development rating in the region is 190. The United States is the leader of the region and the leader of the overall fintech market development rating with 422 points, Canada has 118 points, Mexico is an emerging market with 28 points.

 

Among the factors of FinTech growth in the North American region, the following can be distinguished:

• Developed ecosystem: a large number of market participants, transparency of their relationships, a significant number and volume of investments
• Effective government regulation
• Attractive banking infrastructure for fintech companies
• Qualified personnel.

There are also constraining factors in the region:

• High competition
• Market size – getting customers interested in new products is becoming increasingly difficult.

The largest players in the region, by estimated value: Stripe (USA) - $9.3 billion, SoFi (USA) - $4.5 billion, Credit Carma (USA) - $4 billion. The number of fintech "unicorns" is 16.

 

2. Europe. The average rating of the region is 59 points. About 8,000 fintech companies operate in the region, the volume of investments is $ 2.6 billion. Projected growth is 20%. England is second in the overall fintech development ranking with 224 points, Germany and Switzerland are also among the leaders with 128 and 100 points respectively. Fintech is worst developed in Greece, Romania and Iceland.

 

Growth factors in the European fintech market:

• Implementation of the European Payment Directive PSD2 - Remote Customer Identification
• Market size and demand for services by consumers
• High investor interest in the region.

Restraining factors:

• High competition
• State regulation.

The largest companies in the region: Klarna (Sweden) - $ 2.5 billion, Adyen (Holland) - $ 2.3 billion, TransferWise (England) - $ 1.6 billion. The number of fintech "unicorns" is 5.

 

3. Asia and Australia. The market is considered developing: the volume of investments is $ 5.7 billion, the average rating of the fintech market in the region is 52. The projected growth is 20-30%. Australia and Singapore are the countries where the fintech market is the most developed, with an average rating of 127 and 110 points, respectively.

 

In the top three in the region is China, with 72 points, which, according to the forecasts of the authors of the study, will take the leading position in the world in 2019. A recent $14 billion deal with Ant Financial, a subsidiary of e-commerce giant Alibaba Group, accounted for 35% of global fintech investment in 2018.
Close the overall rating in the region of Turkey, Indonesia, Philippines with a score of 27, 21 and 20 points respectively.

Market growth factors in the region:

• Market volume
• Low competition
• Low distribution of banking products.

Restraining factors:

• Underdeveloped financial ecosystem
• State regulation
• Low qualification of personnel.

The largest representatives in the region: Lufax (China) - $ 18.5 billion, One 97 (India) - $ 7 billion, Tuandaiwang (China) - $ 1.46 billion Number of fintech "unicorns" - 5.

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4. Latin America. The fintech market is just starting to develop, the average rating in this region is the lowest - 21 points. Despite this, the region is very attractive for investors. It attracted $200 million in investment in 2017 and is expected to grow five-card over the medium term. The driver country in the region is Brazil, with an average rating of 24 points.

 

Fintech Growth Factors in Latin America:

• Market volume
• Lack of competition.

Factors hindering the development of fintech:

• Uncertainty in the economies of countries
• Weak ecosystem for the development of technology projects
• Underdeveloped banking infrastructure.

The only fintech “unicorn” is the Brazilian NU Bank, with a ~$1.5 billion valuation.

 

Investment prospects

Fintech unicorns were worth $77 billion in 2017, 40% of which came from companies in developing countries. Their share will reach 50% and continue to grow. 

 

It is obvious that such countries as China, India, Brazil, Mexico, Turkey will receive enormous financial support from international investors. These countries are attractive for fintech investors due to such factors as:

• Insufficient distribution of banking products among the population
• Ability to take into account the mistakes of pioneers in other markets
• Opportunity to use advanced technologies (while in developed markets, companies will focus on the development of existing technologies).

The main areas for profitable investments will be insurance technologies and digital banks. For the reasons listed above, these countries are especially attractive for the development of start-ups. It is most interesting to monitor fintech in developing regions - Asia and Latin America, these are regions with great investment potential and a huge, so far, free market.