KUALA LUMPUR (April 4): The global fintech industry is projected to reach a valuation of US$310 billion this year, growing at 25% CAGR, according to US-based Toptal.

Toptal is a global remote company that provides a freelancing platform, connecting businesses with software engineers, designers, finance experts, product managers, and project managers.

“Fintech” generally describes technologies that strive to improve and automate the delivery and use of financial services to clients.

In its State of the Fintech Industry report recently, Toptal said tech firms have enjoyed a deluge of funding in the last few years.

It said 2018, in particular, was a bumper year, with a total of US$254 billion invested globally into about 18,000 startups through venture capital funds — a sharp increase of 46% from 2017’s total.

It added that figures for 2019 are not yet completely finalised, but initial reports point to a slowdown in funding levels in the first half of the year and a mild rebound in 3Q.

It said this is true across sectors, and is most definitely true for the fintech sector, which is the largest sector in the growth company space.

The report said that in fact, the global fintech market was worth US$127.66 billion in 2018, with a predicted annual growth rate of about 25% until 2022, to US$309.98 billion.

Toptal highlighted that as within the broader venture capital sector, there is a general trend in the fintech industry toward maturity: larger funds (getting closer in both size and behavior to their private equity counterparts) investing in later stages of a company’s life, as illustrated in the funding statistics section.

This, coupled with the retreat in funding for seed-stage companies, points toward a general consolidation and development of the sector, it said.

The firm said that as the market and the fintech landscape are maturing, now is the time to see which companies are here to stay and can become profitable — there will be some necessary consolidation and perhaps some high-profile failures.