Fintech funding saw a significant decline in 2022.
According to CB Insights’ 2022 State of Fintech Report, global fintech funding decreased by 46% to $75.2 billion. This decline was observed across all verticals in the fintech industry, including payments, banking, digital lending, wealthtech, insurtech, and capital markets tech.
In this article, we will delve into the reasons behind the decline in fintech funding and what it means for the industry.
Fintech Funding Decrease Across Verticals:
The funding decline was not limited to one sector of the fintech industry but was observed across all verticals. In 2022, the payment sector saw a 49% decrease in funding, falling to $20.8 billion, compared to $40.5 billion in the prior year.
The banking industry saw a decline of 63% to $9.4 billion, compared to $25.3 billion in 2021. Similarly, digital lenders saw a decrease of 53% in funding, falling to $11.5 billion from $24.7 billion in the previous year.
Wealth tech and insurtech sectors also saw a decline in funding, with capital financing dropping by 41% to $8.8 billion for the former and by 53% to $8.4 billion for the latter.

Fintech Funding Decrease Across Regions:
The decline in fintech funding was not limited to specific regions but was observed globally. In the US, fintech funding decreased by 50% YoY to $32.8 billion, while in Canada it decreased by 48% to $1.3 billion.
The decline was also observed in Asia, Europe, Latin America & the Caribbean, Africa, and Australia.
Reasons Behind the Decline in Fintech Funding:
The decline in fintech funding can be attributed to several factors, including the slowdown in growth that trailed the global economy post-COVID-19, rising inflation, and interest rates.
Michael Ashley Schulman, a Partner and Chief Investment Officer at Running Point Capital Advisors, believes that the decline in cryptocurrency prices and many company collapses recorded last year contributed to the decline in fintech venture capital investments.
Additionally, the closing of initial public offering opportunities and the end of the SPAC fervor also contributed to the decline in fintech funding. Schulman stated that “the model of growth at any cost may have held some logic in a zero-interest rate environment but lost a sense of reasonableness as financing costs escalated.”

Fintech Industry Performance:
Despite the decline in funding, the fintech industry’s performance in 2022 still beats its performance from two years ago.
Compared to 2020, funding increased by 52% in 2022. However, the decline in funding was accompanied by mass layoffs and some players exiting the market.
Final Thoughts
In conclusion, 2022 was a tough year for the fintech industry, with funding declining across all verticals and regions.
The decline in funding can be attributed to several factors, including the slowdown in growth post-COVID-19, rising inflation and interest rates, and company collapses. Despite the decline, the fintech industry’s performance in 2022 still beats its performance from two years ago, with funding increasing by 52% compared to 2020.
Whether 2023 will be any better for the fintech industry remains to be seen.