Despite the cautious optimism permeating the fintech sector heading into 2025, the first half of the year saw fintech investment and deals slow considerably amid headwinds from ongoing geopolitical tensions and concerns around evolving trade policies.
Total fintech investment – including Mergers & Acquisitions (M&A), Private Equity (PE), and Venture Capital (VC) investment – fell from $54,2-billion across 2 376 deals in H2’24 to $44,7-billion across 2 216 deals in H1’25, according to the Pulse of Fintech H1’25 – a bi-annual report published by KPMG that highlights fintech trends globally and in key jurisdictions around the world.
Drops in M&A deal value and PE investment helped pull down investment in H1’25, which recorded just $19,9-billion in M&A deal value in H1’25, compared to $26,7-billion in H2’24; and $1,4-billion in PE investment, compared to $4,4-billion in H2’24.
Fintech-focused VC investment showed significant resilience, rising nominally from $23-billion to $23,4-billion between H2’24 and H1’25. At a regional level, the Americas attracted $26,7-billion of investment, while the EMEA region accounted for $13,7-billion, and ASPAC region for $4,2-billion.
Amid the generally quiet half, several sectors stood out as bright lights – well ahead of 2024’s pace of investment at mid-year. The digital assets space was particularly hot, attracting $8,3-billion as of the end of H1’25, compared to the $10,7-billion seen during all of 2024. AI-enabled fintechs also saw robust interest with $7,2-billion in investment, compared to $8,9-billion in all of 2024.
Auguste Claude Nguets
“With geopolitical tension impacting world economies, it’s not surprising to see the direct impact on the fintech sector, with investments showing the lowest six-month period since 2020,” says Auguste Claude Nguetsop, partner and head of financial services sector for KPMG in Southern Africa.
“The payment sector which has been a leading driver of investment in fintech over the past decade, experienced a brutal slowdown with funding tumbling to just $4-billion in H1 2025, compared to $30-billion in 2024.
“There were a few exceptions, as this global economy uncertainty did not seem to affect investment in digital assets and currencies, which attracted as much investment in the first half of 2025 as during the full 2024 year, at around $10-billion,” he adds.
“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 for financial services at KPMG International. “Firms were more focused on cost cutting and on divesting non-core and underperforming assets than new deals.
“The increase in AI-focused fintech investment dovetails with that. Both investors and institutional users are very keen on the potential of generative AI and agentic AI—and startups that are to improve efficiencies and drive value through GenAI will command premium valuations and significant investment. Fintech-focused AI is only going to get hotter headed into the back half of 2025.”
Key highlights for H1’25
- Global fintech investment saw the softest six-month period since H1’20, with just $44,7-billion in investment across 2 216 deals.
- Global M&A deal value fell from $26,7-billion in H2’24 to $19,9-billion in H1’25, while PE investment fell from $4,4-billion to $1,4-billion; global VC investment remained steady over the same timeframe, rising marginally from $23-billion to $23,4-billion.
- The EMEA region was the only major region to see fintech investment grow, from $11,1-billion across 780 deals in H2’24 to $13,7-billion across 759 deals in H1’25.
- The Americas attracted the most fintech investment in H1’25, with $26,7-billion invested across 1 092 deals in H1’25, down from $35,7-billion across 1 150 deals in H2’24.
- The ASPAC region had the softest level of fintech investment, with just $4,2-billion across 363 deals in H1’25, compared to $7,3-billion across 444 deals in H2’24.
- At the sector level, digital assets, AI, and regtech were all trending well ahead of 2024’s investment levels at mid-year. Digital assets had $8,3-billion in investment in H1’25, compared to $10,7-billion during all of 2024; while AI saw $7,2-billion in investment, compared to $8,9-billion in all of 2024.
Payments sees lowest level of investment on record
Historically, the payments space has been the biggest driver of fintech investment globally; this was not the case in H1’25 as the space attracted just $4,6-billion in investment globally – the lowest level on record – as investors shied away from large consolidation type M&A deals.
Three of the four largest payments deal of H1’25 were VC raises, including a $500-million raise by UK-based Rapyd Financial Network, a $366-million raise by Argentina-based Ualá Bank, and a $301-million raise by Singapore-based Airwallex.
Interest in payments-focused startups remained quite robust in emerging markets like Southeast Asia, Africa, and South America, although deal sizes were quite modest.
Digital Assets coming into the limelight
The digital assets and currencies sector continued to see interest surge in H1’25, attracting the largest share of fintech investment globally during H1’25 ($8,3-billion), led by a $2-billion raise by Grand Caymans-based crypto exchange Binance.
While investment in the space is expected to fall well short of 2021’s peak high of $31-billion, it is on track to see a strong three-year high. Investors showed particular interest in stablecoins, particularly in areas like trading, remittances, and payments in emerging markets.
The rise in digital asset investment was likely helped both by evolving regulations, including the repeal of SAB 121, and the passage of the GENIUS Act in the US and MiCA in Europe, all which support regulatory clarity for digital asset services in financial services; and the successful IPO exit of USDC stablecoin issuer Circle which raised $1,1-billion on the NYSE in H1’25. Other US based digital asset platforms are seeking to follow Circle in H2 with IPOs to gain alpha returns post listing.
Fintech investors excited about AI-enablement
AI-focused fintechs attracted $7,2-billion in investment in H1’25, with investors focusing heavily on AI-enablement of institutions and startups as a means to reduce costs, enhance efficiencies, and drive workforce capacity and value.
While automation and generative AI continued to attract attention, fintech investors showed particular interest in the development and use of AI agents in financial processes during H1’25, including in areas like anti-money laundering (AML), know your customer (KYC), and cybersecurity response.
Americas attracts $26,7bn in fintech investment
Fintech investment in the Americas fell from $35,7-billion in H2’24 to $26,7-billion in H1’25, while deal volume fell from 1 150 to 1 092.
The US accounted for $20,9-billion of this investment, a decline from $26,7-billion in H2’24.
Fintech investment in Canada fell from a record high $7,5-billion in H2’24 to $1,6-billion in H1’25 due to the absence of any mega deals – still a robust total compared to historical norms.
Brazil saw fintech investment fall from $541-million in H2’24 to $339,3-million across 47 deals in H1’25.
While overall investment fell in H1’25 in the Americas, VC investment picked up in the region, from $12,8-billion in H2’24 to $14,4-billion in H1’25, driven largely by the $2-billion raise by Binance.
EMEA region sees fintech investment rise
Fintech investment in the EMEA region rose from $11,1-billion in H2’24 to $13,7-billion in H1’25, driven in part by the $3,2-billion buyout of UK-based Preqin by BlackRock.
The UK attracted the largest share of fintech investment in the region during H1’25—$7.3 billion, compared to $4.8 billion in H2’24, while France saw fintech investment more than double, from $974,4-million to $2,3-billion between H2’24 and H1’25. France’s total was driven in part by the $1,7-billion take private of Esker by Bridgepoint. Fintech investment in both Germany and the Nordics region was quite soft in H1’25, with just $651,2-million and $180,4-million respectively.
A very soft start to the year in ASPAC region
Both fintech investment and deal volume dropped considerably in the first half of 2025, falling from $7,3-billion across 444 deals in H2’24 to $4,2-billion in investment across 363 deals during H1’25.
India accounted for $1,5-billion of this investment across 99 deals, while Singapore accounted for $1-billion across 90 deal, Japan accounted for $760,5-billion across 39 deals,
Australia for $142,4-million across 31 deals, and China for $423-million across 22 deals. Deal sizes in the ASPAC region were relatively small during H1’25, with the largest deal coming from the $571,4-billion acquisition of Japan-based robo advisory firm WealthNavi by MUFG.
Digital assets and AI poised for additional growth
Heading into H2’25, fintech investors are expected to remain very selective with their capital, prioritizing investments in startups with strong fundamentals and proven profitability. AI will remain a very hot area of investment, with investors increasingly focused on scalable and horizontally focused product offerings, primarily from start-ups.
Stablecoin providers, digital asset financial market infrastructure (FMI) , tokenisation platforms and governance, risk and compliance (GRC) solutions will dominate investor wish lists from VC to CVC and PE firms.
The US Genius and Clarity Acts, MICA and SAB 122 will likely drive regulated and institutional-grade investment opportunities in this domain rippling across global markets, surpassing the last 10 years developments.
“We’re seeing a major upswell in activity and investment in the digital asset space. Regulations are really starting to come into focus in several jurisdictions—giving both startups and investors more confidence,” said Karim Haji, global head of financial services at KPMG International. “Looking ahead to H2’25, digital assets and currencies are well position to see investment grow even more. Whether Circle’s highly successful IPO will drive other crypto firms to exit will also be a trend to watch out for in the space.