KPMG: Why Global Fintech Investment Fell 18% in H1 2025
Global fintech investment fell 18% to US$44.7bn across 2,216 deals in the first half of 2025, according to KPMG's latest Pulse of Fintech report.
The figure represents a decline from US$54.2bn across 2,376 deals in the second half of 2024, marking the lowest six-month period since H1 2020.
The downturn reflects broader market caution as investors grapple with geopolitical tensions, shifting US trade policies, and higher interest rates that have reset return expectations across the sector.
The second quarter proved particularly weak, with just US$18.7bn invested across 972 deals globally.
“Given the geopolitical situation globally, much of the fintech investment we've seen so far in 2025 has been very strategic, rather than broad-brush speculative investments,” says Anton Ruddenklau, Lead of Global Fintech and Innovation at KPMG International.
“Corporates were more focused on cost cutting and on divesting non-core and underperforming assets than new deals.”
Digital assets surge while payments struggle
Digital assets and currencies emerged as the sector's standout performer, attracting US$8.4bn in investment during the first half.
The figure already approaches the US$10.7bn total for the entire 2024 calendar year, driven largely by regulatory clarity and institutional adoption.
The passage of the GENIUS Act in the US during July established a framework for stablecoins, creating momentum that market participants expect will accelerate through the remainder of 2025.
Circle's IPO on the New York Stock Exchange raised US$1.1bn with shares rising 168% on the first day, demonstrating renewed appetite for digital asset exits.
Digital assets surge while payments struggle
Digital assets and currencies emerged as the sector's standout performer, attracting US$8.4bn in investment during the first half.
The figure already approaches the US$10.7bn total for the entire 2024 calendar year, driven largely by regulatory clarity and institutional adoption.
The passage of the GENIUS Act in the US during July established a framework for stablecoins, creating momentum that market participants expect will accelerate through the remainder of 2025.
Circle's IPO on the New York Stock Exchange raised US$1.1bn with shares rising 168% on the first day, demonstrating renewed appetite for digital asset exits.
AI-focused fintech ranked as the second-largest category by investment value, capturing US$7.2bn compared to US$8.9bn for all of 2024.
Investors showed particular interest in agentic AI solutions that can perform sequences of tasks based on real-time data analysis.
The median valuation for early-stage AI-driven fintech companies reached US$134m, well ahead of non-AI-driven fintechs.
By contrast, the payments sector experienced a sharp decline, attracting just $4.6 billion in investment compared to US$30.8bn during 2024.
The fall reflected investor reluctance to pursue billion-dollar consolidation deals that had characterised previous years. The largest payments deal was Rapyd Financial Network's US$500m raise.
Regional patterns diverge markedly
The Americas captured more than half of global fintech investment with US$26.7bn, led by the US$2.6bn acquisition of Next Insurance by Ergo Group and Binance's US$2bn fundraising round. However, this represented a decrease from US$35.7bn in the second half of 2024.
The EMEA region bucked the global trend, with investment rising from US$11.1bn to US$13.7bn.
The UK dominated regional activity, accounting for eight of the ten largest EMEA deals, including BlackRock's US$3.2bn acquisition of data provider Preqin and the US$1.7bn take-private of France-based Esker by Bridgepoint.
“While overall investment volumes have softened, strategic acquisitions demonstrate that high-value deals are still being pursued”
Regional patterns diverge markedly
The Americas captured more than half of global fintech investment with US$26.7bn, led by the US$2.6bn acquisition of Next Insurance by Ergo Group and Binance's US$2bn fundraising round. However, this represented a decrease from US$35.7bn in the second half of 2024.
The EMEA region bucked the global trend, with investment rising from US$11.1bn to US$13.7bn.
The UK dominated regional activity, accounting for eight of the ten largest EMEA deals, including BlackRock's US$3.2bn acquisition of data provider Preqin and the US$1.7bn take-private of France-based Esker by Bridgepoint.
The Asia Pacific region recorded the weakest performance, with investment falling to US$4.3bn from US$7.3bn in the previous six months.
Deal activity remained concentrated in emerging markets, with India maintaining the highest deal volume at 99 transactions worth US$1.5bn, despite a modest decline in total value.
Market structure shifts toward selectivity
Merger and acquisition activity fell significantly across all regions, dropping from US$26.7bn in the second half of 2024 to US$19.9bn in the first half of 2025.
Private equity growth investment declined more sharply, falling from US$4.4bn to US$1.4bn over the same period.
Venture capital investment proved more resilient, rising nominally from US$23bn to US$23.4bn between the two periods. However, deal volume contracted as investors focused on later-stage companies with proven business models.
The IPO market showed signs of recovery, with successful listings from eToro, which raised US$620m on Nasdaq, Chime, which secured US$864m, and Circle.
The Hong Kong Stock Exchange also recorded increased insurtech IPO activity as firms took advantage of improving market conditions.
Insurtech attracted US$4.8bn in global investment during H1 2025, exceeding the US$2.9bn raised during all of 2024.
The total was propelled by the Next Insurance acquisition, but also reflected growing investor interest in technology-enabled insurance solutions.
“The first half of 2025 has underscored a recalibration in fintech M&A activity,” says Tim Johnson, Global Lead for Deal Advisory Financial Services at KPMG International.
“While overall investment volumes have softened, strategic acquisitions demonstrate that high-value deals are still being pursued.”
