This article was first written at the end of 2022, after the 2021 fintech boom. It was updated in October 2026 with what happened next.
The growth of the fintech industry turned a lot of heads in 2021, one of the strongest years on record for fintech investment. Looking at what happened next is a useful lesson in both the opportunity and the risk.
Fintech investment totaled $210 billion in 2021 according to a report by KPMG. The year also saw an unprecedented rise in crypto and blockchain markets, with crypto exchanges like FTX raising billions. 2022 reversed much of that: crypto prices crashed, and in November 2022 FTX collapsed into bankruptcy. Its founder, Sam Bankman-Fried, was convicted of fraud in November 2023 and sentenced to 25 years in prison in March 2024 (US Department of Justice).
The lesson for investors is that fast-growing fintech segments can also fall fast. Crypto, NFTs and decentralized finance (DeFi) have all been through sharp boom-and-bust cycles, and some well-funded companies failed outright. Diversification, and investing only what you can afford to lose, matter more in this sector than in most.
Customer experience is one of the areas where fintech companies have focused, and it has driven interest in fintech stocks. Core banking functions are easier and more user-friendly thanks to fintech. The buy-now-pay-later (BNPL) industry also grew quickly, but it carries real risks: it can encourage overspending and depends on borrowers repaying on time. Both BNPL and crypto can lose money quickly, so treat them as high-risk investments.
In 2022, with crypto falling, rising interest rates, high inflation and war in Europe, investors became much more cautious than in 2021, and many fintech startups found it harder to raise money.
A report by KPMG claims that there will be increased interest in cybersecurity automation in 2023, and although investments in cryptocurrencies will stay slow, they will be focused on infrastructure. Stability, security, and infrastructure are things investors will be looking for in fintech companies. VCs will be more interested in B2B and data-driven solutions.
Investment did recover. According to KPMG’s Pulse of Fintech, global fintech investment reached $103.1 billion in the first half of 2026, though across fewer deals (2,100), with money concentrated in larger, more established companies, especially in payments and AI.
For the current case for and against investing in the sector, read The Rewards and Risks of Investing in Fintech. This article is general information, not financial advice. Investing involves risk, including the loss of your capital.
According to a report by Forbes, the areas that are quite promising notwithstanding the general downward trends are embedded finance, alternative finance, blockchain, and environmental initiatives.
