SAN FRANCISCO – October 23, 2024 – While fintech companies face significant headwinds – from high interest rates to increasing regulatory scrutiny – they are also finding opportunities in 2024, according to the latest report. Future of Fintech Report of Silicon Valley Bank (SVB), a division of First Citizens Bank. Venture capital (VC) investment remains weak, hovering near a six-year low for the sector, as deal flow has shifted to early-stage, with more than three seed deals for each series A. Artificial intelligence (AI) is also making an appearance. as a bright spot for the industry as investors and founders explore its growing role in the sector.
THE 2024 Future of Fintech Report provides detailed analysis of the fintech market, including investment and fundraising trends. It also examines the growing importance of AI in horizontal applications, including customer service and productivity, as well as in vertical applications specific to finance.
“While fintech companies face challenges, we expect a broader recovery in investment in 2025, as we continue to see opportunities for the sector,” said Nick Christian, national head of fintech and specialized financing at Silicon Valley Bank. “For example, US fintech companies are becoming more efficient: almost 80% of them are improving their EBITDA margins year over year and almost 30% now have six to 12 months of runway, compared to 20% last year. Over time, generative AI opens up opportunities for value creation in fintech – whether traditional companies improving efficiency by reducing labor costs or native fintech companies. AI that creates new solutions.
Additional findings from The Future of Fintech 2024 the report includes:
Key Data Points on Fintech Investing
- Fintech-oriented venture capital fundraising has fallen 91% since its 2021 peak, with funds raising $5 billion through September. Announced funds, including those yet to close, totaled $9 billion, the lowest since 2020.
- One in twelve dollars of venture capital went to a fintech company in 2024, compared to one in five dollars in 2021.
- Venture capital firms have slowed their pace of deployment in fintech. In 2021, the 100 most active US fintech investors were closing more than two deals per month. That rate has fallen to less than one transaction per month this year.
- In 2021, fintech deals over $100 million accounted for 65% of deal activity in the sector. By 2024, this figure has fallen to 34%.
AI investment in numbers
- Since 2021, mentions of AI in fintech company earnings calls have increased fourfold.
- AI-native fintech companies have the advantage of incorporating AI tools into their early-stage products, while traditional fintech companies are largely reducing their human capital costs in order to adopt AI. ‘AI.
- Native AI companies in fintech create more value per dollar invested than traditional/first generation fintechs (i.e. median of VC deals in 2024 was 4, 0x for native AI vs. 2.7x for legacy/first-gen AI).
Learn more
To read the full Future of Fintech 2024 report, click here: Future of Fintech Report 2024 | Bank of Silicon Valley (svb.com)
A leader in providing market intelligence for the innovation economy, SVB has produced over 10 new market reports in 2024. For the complete library of SVB’s signature reports, please visit Market Research Industry Trends and Outlook | Bank of Silicon Valley (svb.com)
About Bank of Silicon Valley
Silicon Valley Bank (SVB), a division of First Citizens Bank, banks some of the world’s most innovative companies and investors. SVB provides commercial and private banking services to individuals and businesses in the technology, life sciences and healthcare, private equity, venture capital and premium wine industries. SVB operates in innovation centers across the United States, meeting the unique needs of its dynamic customers through deep industry expertise, knowledge and relationships. SVB’s parent company, First Citizens BancShares, Inc. (NASDAQ: FCNCA), is one of the 20 largest U.S. financial institutions with more than $200 billion in assets. First Citizens Bank, Member FDIC. Learn more at svb.com.