Despite Covid-19’s impact on the global economy, the steady pivot to digital financial services has helped fintech and the overall financial services industry emerge from the pandemic relatively unscathed. Indeed, during the low-interest rate environment of the past few years (Figure 1), fintech valuations increased dramatically across nearly every market segment, especially in certain areas like crypto.
However, in 2022, geopolitical insecurity, rising inflation, and general macroeconomic uncertainty altered the calculus for many on the future of the fintech industry, especially in growth markets. Higher interest rates and inflation (Figure 2) are dragging on fund-raising and growth. As one VC tech exec described it, “An entire industry got ahead of its skis.”
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