It’s official: 2020 was a sucky year for fintech funding.

After rising rapidly from under $1 billion in 2010 to over $41 billion in 2019, fintech funding dropped appreciably in 2020. Overall investment in fintech was down 31% in 2020 compared to the previous year. And an already-bad year ended even worse: Q4 2020 saw the lowest total fintech funding levels of the year and the single worst quarter in two years.

Over the course of 2020, Forrester analyzed fintech funding data to draw insights and key findings. If you’re a Forrester client, you can read our analysis of Q1, Q2, and Q3.

As we look back at the final quarter of 2020 — and at the past year as a whole — a few key trends emerge:

  • Incumbent providers and established fintechs are investing in — and acquiring — fintech startups. Discussions around fintech investing typically focus on VC funding (and understandably so), but both incumbent financial providers and larger existing fintech companies are now putting money into smaller fintech firms. For example, Q4 saw more than a half-dozen traditional banks invest in fintech companies building “open finance” ecosystems and similar digital infrastructure — and one of the largest fintech firms in the world acquired an African API-based payments services provider.
  • Challenger banks attract funding as they help customers through the pandemic. Direct-to-consumer banking brands pulled in significant investments in Q4 2020 and throughout the year. These digital banks differentiate by helping consumers and small businesses as they navigate the economic shocks of COVID-19. For example, a US digital bank offered access to pandemic stimulus checks before most of the major US banks. It went on to pull in over $400 million in Q3 2020.
  • Investors and firms are mostly betting on fintechs that add convenience in the “new normal” of a crisis-stricken world. The COVID-19 crisis has changed consumers’ behaviors, and many of these changes will persist. As a result, the fintech companies receiving the most funding add convenience to the way consumers and businesses adapt themselves to the new normal. For example, investors put more money into digital lenders in the UK and Brazil.

There’s no doubt 2020 was a down year for fintech funding. So what does the future hold? If you want to read our detailed analysis of fintech funding in Q4 2020, feel free to email me at

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Thanks for reading!