The fintech industry environment has continued to progress in recent years. The sector has experienced booms and busts, from the 2021 highs to the 2022 and 2023 downturns. In turn, several noteworthy trends and advancements are influencing the flow of capital into fintech as 2024 progresses. Let's look at the trends in fintech funding and how we can leverage the changing landscape for our fintech company.

Trends in Fintech Funding - Venture Capitalist

In 2023, venture capitalist investments in fintech fell dramatically to $43 billion, the lowest level in six years. This was a significant decrease compared to the $143 billion in 2021 and the $89.5 billion in 2022. Reductions were also made to the early and late funding stages, reaching their lowest points in 2016 and 2017, respectively.

While access to funding may only affect some fintech companies, denoting this across the board is essential - especially for companies pitching their businesses to angel investors. There may be an underlying reason venture funding is decreasing overall, whereas on the contrary - some subsidiaries in fintech have seen an increased allocation of overall market share. Let's look at some thriving subsidiary industries in fintech.

Digital Payments and Embedded Finance

A lucrative sub-industry of financial technology, the digital payments and embedded finance industry continues to develop well with the trends in fintech funding. A recent notable event where Stripe received $6.9 billion in VC funding - marking it as one of the largest VC rounds.

Regulation Technology and Blockchain

A core subsidiary of fintech, regtech and blockchain has shown a renewed interest. As this industry mainly focuses on compliance and risk management, it will continue to develop as fintech increases its presence in modern society.

AI and Machine Learning

One of the most significant public developments in the last couple of years, this industry shows promising growth for technology. As tech increases its presence in everyday life, businesses have been incorporating sophisticated pipelines that implement the cumbersome research and development tasks for professionals everywhere.  

When looking at trends in fintech funding, the decrease in overall funding could be chalked to plenty of reasons, but there is one takeaway: our market position needs to be reflected by investors and may/may not need to be improved. This means reallocating some budgets and establishing a solid industry presence. Whether it's finding an advisor to utilize their network or the most important decision a fintech company could make in finding a sponsor bank, some due diligence and brand-building may reap many benefits alongside the vision of engineering. We don't need an economist to conclude that the lower the funds available, the harder we will work to secure more investments.

Popular Alternatives

While some fintech companies are strictly based on their product, it's essential to look at the trends in fintech funding, where plenty of opportunities in fintech don't include maintaining your product—Que in - banking as a service.

A popular service for 2024, BaaS enables agencies to utilize modern technology for efficient database querying and comprehensive reporting. A cloud-based solution is projected to increase by 17% in 2024. This route may be a fintech subsidiary, but it's still a lucrative option for engineers looking to deviate from retail.

Conclusion

Due to fintech's progressive nature, we've seen a range of up-and-down economic turns related to technology in the financial industry. From big sponsor banks receiving consent orders to a decrease in venture capitalism, plenty of noteworthy things have happened in fintech over the last few years. While, as a whole, it looks like the fintech industry is stabilizing with fewer funds for investment, we'd like to phrase it adversely as subsidiary industries are progressing with current economic demands.

Rather than seeing that some of these trends may be detrimental to your operations, adapting to the changes and re-evaluating your business model may be better. Building a product that will solve people's problems will always be at the core of our values, but it may be the best economic decision to diversify your service offerings.

Are you a fintech looking for your next partner? Or are you looking to get on the map? Find our resources and look at our map to find prospects that align with your fintech today.

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