Fintech Sector Highlights: August 2024

August brought a mix of stability and growth to the fintech world, with 146 financing events recorded. Equity financing, a key area, saw 113 events for the third straight month, reflecting a stagnating trend. Meanwhile, loan agreements surged, with 33 deals—10% above the 12-month average. Loan-based financing continues to rise, with its moving average up 11% since the start of the year. The total value of fintech financing in August hit $5 billion, just shy of the 12-month average of $5.3 billion. This figure, while solid, is skewed by a few blockbuster months in the past year, where funding rounds soared to twice the usual amount. Big regulatory moves are on the horizon. The EU’s Digital Operational Resilience Act (DORA), arriving in January 2025, will reshape how banks manage IT risks. Non-compliance will come with stiff penalties, making it a game-changer for digital risk management in finance. Apple also made waves by announcing it will open its mobile payments system to other operators after regulatory pressure. Soon, iPhone users will be able to access alternative payment solutions beyond Apple Pay, likely sparking fresh competition and innovation. The EU’s AI Act came into force on August 1, regulating artificial intelligence based on the risk level of its applications. This new rule will impact fintechs using AI, setting guidelines to ensure responsible and safe AI deployment. Private credit is becoming a critical funding lifeline for fintechs, offering flexibility that traditional banks can’t match. It’s fueling the rise of embedded lending, where companies integrate lending into their platforms. However, this area operates outside many regulatory frameworks, raising concerns among industry watchers. Meanwhile, big fintech players like Revolut, Stripe, and Klarna are gearing up for IPOs. Despite strong investor demand, public markets are valuing fintechs more conservatively, a trend that’s led to a correction in valuations for several industry giants. On the cryptocurrency front, stablecoins hit a new high in market value, reaching $168 billion in 2024. The sector saw a milestone in August when Binance listed the MiCA-compliant EURI stablecoin, the first-ever bank-issued and fully regulated stablecoin, signaling the growing integration of digital assets into traditional finance. August showcased the fintech sector’s resilience, with loan-based financing on the rise and new regulations setting the stage for major shifts. From private credit fueling growth to fintech giants eyeing IPOs and stablecoins breaking new ground, the industry continues to evolve at a rapid pace. Stay tuned as fintech navigates the balance between innovation and regulation. Don’t forget to check out our brand new video in which we examine the fintech sector’s performance. (Disclaimer: the below video was made using artificial intelligence.) (Cover photo: Depositphotos).