Globally, artificial intelligence (AI)-enabled startups in financial services raised US$2.28 billion ($3.07 billion) in 2Q2024, the first time the dollar amount of AI-related funding passed the US$1 billion mark since 2Q2022, according to a report by S&P Global Market Intelligence.
The number of funding rounds for AI startups in financial services stood at 51. Meanwhile, fintech startups saw a 10% fall in round count and 36% decline in dollar value y-o-y in 2Q2024, with 462 funding rounds worth US$8.77 billion.
However, compared to 1Q2024, this total amount was up 52%, while total rounds were down 11%.
The banking technology segment saw US$2.21 billion worth of funding in 2Q2024, up US$700 million from a year ago. On the other hand, payments drew US$1.85 billion, down 35% a year ago, even after excluding the impact of Stripe’s US$6.3 billion round, the report notes.
Globally, late-stage investing remained on an upward trajectory as mature-stage fintech rounds grew year over year to 62 from 53.
Compression in round stages appears to be easing for fintechs at all stages except for seed firms, which saw the average round size fall 12%. Overall, 2Q2024 saw 16 rounds of more than US$100 million, compared with eight a year ago and 10 in the previous quarter.
Finally, by region, Asia Pacific saw dollar amount in funding drop 31% y-o-y to US$1.53 billion.
Europe, Middle East and Africa saw funding value nearly double y-o-y to US$3.45 billion in 2Q2024 from US$1.8 billion, with the UK alone attracting US$2.30 billion.
Latin America’s fintech funding surged 101% y-o-y to US$590 million. North America pulled US$3.20 billion, down 66% from US$9.37 billion in the same period a year ago, which had the benefit of Stripe's more than US$6.50 billion round.
“In the second quarter of 2024, fintech-focused venture capitalists scaled back their pace of dealmaking at all stages, except for mature. Instead, they engaged in more jumbo-sized deals, especially in AI-themed startups. The fintech industry is increasingly leveraging AI and embedding foundation models into their application programming interfaces (APIs) to deliver AI-infused features aimed at modernizing workflows or improving customer experiences,” says Sampath Sharma Nariyanuri, senior fintech research analyst at S&P Global Market Intelligence.
