KUALA LUMPUR (Jan 5): Financial services remained the leading sector for venture investment in 2022, despite an overall pullback in venture funding and shockwaves in the crypto industry.

In a report on Wednesday (Jan 4), Crunchbase, which tracks trends, investments and news of global companies from start-ups to the Fortune 1000, said financial technology (fintech) is expected to remain strong in 2023, with areas from payments to accounting management likely to lead the way. 

It said payments could remain the most-funded sector within fintech, especially start-ups focused on business-to-business payments.

On the other side, it said cryptocurrency and the blockchain, which experienced a large increase in funding in recent years, will most likely face a pullback in the wake of FTX’s collapse. 

Crunchbase said venture investment in fintech companies in 2022 had reached US$81 billion (RM356.28 billion) as of Dec 14 — down 41% so far from the peak of 2021 at US$137 billion.

Still, that US$81 billion figure still exceeded 2020's amount by more than US$30 billion. 

All told, it said the sector has grown more than 10 times in the last decade from US$7 billion in 2013. 

Within the fintech sector, payments- and banking-related start-ups received the most venture funding over the past five years, Crunchbase data showed.

Cryptocurrency start-up funding exceeded these two leading sectors in 2021, but dropped back a bit in 2022.

Blockchain technology also received more funding in 2021, and grew its share into 2022. 

E-commerce and insurance, meanwhile, fell as a proportion of overall dollars invested. 

The firm said of the US$11 trillion in market capitalisation in financial services companies as of October 2022, only US$508 billion, or 2%, was in modern fintech companies.

That proportion was higher in 2021 at 5% due to high valuations given to public technology stocks, but in prior years, it did not reach 1%.