The onset of the pandemic and a massive increase in the use of digital services led to a record number of IPOs among fintechs back in 2020, especially in the US. CB Insights data shows that 30 fintechs have listed in the US since 2020.

However, the notion that the pandemic would accelerate the migraiton to digital financialservices has been challenged by the macro-economic events that has seen inflation increase at a global level, raising interest rates as a result.

This has also led more investors to quesiton the untested business models and lack of profits at some fintechs, consequently cooling the investor sentiment around the sector.

Analysis from the Financial Times has shown that the share price of listed fintechs has dripped by 50% so far this year,almost twice as much as the drop in conventional markets - the Nasdaq Composite has fallen by 29% during the same period.

In addition, the cumulative market capitalisation for fintechs has fallen by $156bn in 2022. And if each listed fintechs was to have its current stock valued in comparison to its all-time high, around $460bn would have been lost.

The FT quoted Dan Dolev, analyst at Mizuho, who said fintechs and digital payments firms in particular were the first part of the tech sector to benefit from the pandemic with people stuck at home and buying thigns online. “Now they are overcorrecting to the downside ahead of other sectors too,” he said.

However, Dolev also said that he expects a rebound frommany fintechs in the second half of the year.

Nor have the valuation issues been restricted to listed fintechs. Privately-funded payments firm Stripe has slashed its valuation by 28% in recent days.