The newest Pulse of Fintech report by KPMG and CB Insights shows that investment in VC-backed fintech companies and startups fell nearly 50% across the globe, with U.S. investment specifically down 26% from same quarter results last year.

The number of deals is also down for the quarter, with mega-round activity at a five-quarter low. This quarter, the US completed only 97 fintech funding deals, compared with the 130 deals completed in Q1’16.

The report cites multiple reasons for investor hesitation in the quarter, among them the initial results and speculation regarding Brexit, the atmosphere surrounding the upcoming U.S. presidential election, and the “ongoing concerns about valuations and significant headwinds in the marketplace lending space.” As stated by Brian Hughes, Co-Lead Partner, KPMG LLP’s Venture Capital Practice, the results of this past quarter definitely show more hesitation on the part of investors.

“It’s all about timing,” said Hughes. “Right now, investors don’t want to do a mega-round with a higher valuation, when they could just wait and grow their existing portfolios.”

However, despite an overall drop in deals and VC-backed fintech investments, the report finds that while fintech may be at a bit of a plateau this year, the future of the industry is still rosy, with funding still “on pace” to exceed the investment levels reported last year.

“In fintech we’re still seeing interest in quite a few areas; we still see some companies raising capital on the back of momentum,” said CB Insights Senior Research Analyst Matthew Wong, citing the recent $9.25 million funding raise by Stash Invest, a micro-investing mobile app. “Venture capital interest is still happening at the early stages for fintech, as well as for InsurTech.”

Wong also noted that corporate investment in fintech is at a quarterly high, which could be due to the success of corporate VC arms established by companies like Santander and Goldman Sachs.

Despite the drop in number of deals, North America is also still leading the fintech charge, with U.S. fintech deals accounting for around $1.3 billion of the total $2.5 billion raised in Q2’16. However, the largest private fintech fund round this quarter (or ever) occurred in China, with Ant Financial raising $4.5 billion, proving the report’s assertion that the popularity of fintech in the region “shouldn’t be discounted” just because of this quarter’s drop.

As for the future of fintech, investors may be cautious, according to Hughes, but there’s definitely still interest.

“Clearly, the third quarter is going to be challenging just due to market conditions,” said Hughes. “But there are a lot of other sectors which are very attractive right now, including blockchain and bitcoin; especially blockchain, because that can be used for much more than virtual currency.”

To learn more about fintech funding, join us at Bank Innovation Israel this November 1-3 in Tel Aviv. Learn more and register here.