Asia Pacific records USD11.6 billion in FinTech investment: Report

By Leandra Monteiro

Asia Pacific FinTech’s have attracted USD 11.6 billion across 565 deals from venture capital, private equity and M&A in 2020, compared to USD 16.8 billion in 2019, reaching a six-year low. This was attributed to the decline in investment due to the pandemic.

In comparison, global FinTech funding was USD105 billion in 2020, the third highest FinTech investment on record despite a significant drop compared to USD165 billion in 2019, according to KPMG’s Pulse of FinTech H2’20 report.

Total FinTech investment in China was lower in 2020, at USD1.6 billion, from USD4.8 billion in 2019. This reflects the significant maturity of China’s FinTech sector, particularly in the payments space which is dominated by a small number of tech giants. The payments space showed the most regional resilience.

After the global pandemic brought many deals to a halt, the scenario changed in H2’20. The second half of the year was witness to deals such as Australia-based eNett was acquired by US-based WEX for USD577 million, Australia-based Judo Bank raised USD209 million, South Korea-based Toss raised USD177 million.

Andrew Huang, Partner and FinTech Leader, KPMG China says: “In China, we are seeing growth in a number of emerging fintech sectors, including blockchain, regtech and wealth management. One big change we have seen in 2020 has been the focus of these fintechs, with many now focusing their efforts on empowering traditional financial institutions rather than providing direct to consumer products.”

A segment that did well was Insurtech, which continued to gain traction among investors in China. In H2’20, Shuidi, a crowdfunding platform which focuses on medical expenses, raised two rounds of funding totaling USD380 million.

Barnaby Robson, Partner, Deal Advisory, KPMG China said, “Pandemic-era accelerated growth and loose monetary policy has driven up stock-market valuations for tech companies. Shareholders of privately owned fintech groups recognize there is a window to list at excellent valuations, and we expect significant IPO activity in 2021/22.”

Incumbent banks in Mainland China made significant investments internally in 2020 in order to transform their digital capabilities. Several also continued to set up subsidiaries in order to build their capabilities and provide B2B digital banking services to smaller institutions.