A KPMG report expected blockchain to remain a “relatively hot” fintech sector across much of Asia and in Singapore, in addition to payments and lending
The KPMG Pulse of Fintech report revealed that the total global fintech investment “more than doubled” quarter-over-quarter in Q2 2017 to US$8.4 billion, up from US$3.6 billion in Q1 2017.
Global mergers-and-acquisitions (M&A) investments is credited for helping drive the fintech market rebound with US$5.9 billion in deal value for M&A for the quarter.
Comparatively, global fintech funding faced a slight decline with just over US$2.5 billion invested across 227 deals in the quarter.
At other hand, the report also saw an increase in corporate venture capital (CVC) investment with US$2.6 billion invested by end of Q2 2017, compared to US$9 billion in all of 2016, which was skewed by mega-deals.
Deal volume was also increasing from 17 per cent in 2016 to 21 per cent in 2017.
As for popular sectors, investment in regtech rose “significantly” in Q2 2017 with the US$591 million invested in the first half of 2017 already exceeding the US$583 million raised during all of 2015. This number is also on pace to “significantly exceed” 2016 total by end of year.
“Fintech continues to evolve with many established fintechs looking to expand their product offering and their geographic reach,” said Brian Hughes, Co-Leader, KPMG Enterprise Innovative Startups Network, and National Co-Lead Partner, KPMG Venture Capital Practice, KPMG in the US, in a press statement.
“In addition we are also seeing new fintechs moving beyond customer facing services to target mid and back office inefficiencies,” he added.
The trend was proven by the three B2B companies in the top 10 global fintech deals in the quarter: CCH Tagetik (US$321 million), Pos Portal (US$158 million) and ITRS Group (US$140 million).
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Looking into Asia
In Asia, total fintech funding remained relatively steady quarter-over-quarter with US$760 million invested across 51 deals during Q2 2017, compared to US$790 million across 56 deals in Q1 2017.
As indicated by Hughes, fintech financing trends in Q2 2017 in the continent were characterised by geographic diversity and a lack of megafinancings.
Similar to the trend in global level, corporate fintech investment in Asia grew from 22.5 per cent in Q1 2017 to what the report claimed as “record high” in Q2 2017.
In countries such as Singapore, fintech investment rose quarter-to-quarter to US$61.5 million, though deal volume continued to decline.
Despite the decline, historical trends revealed that this situation is not out of the ordinary, as it is seen as the result of the move towards a more partnership-oriented fintech model in the country.
During Q2 2017, the Monetary Authority of Singapore (MAS) began to shift focus from education and innovation to promoting technology adoption and attracting companies to launch offerings in Singapore.
When it comes to trending sectors, blockchain is expected to remain a “relatively hot” investment area across much in Asia, in addition to payments and lending.
Meanwhile in China, regtech is also forecasted to attract more attention from investors, particularly related to ani-money laundering efforts and digital identity management.
The report also predicted a growing interest in solutions related to financial inclusion “over the next few quarters” considering the significant underbanked and unbanked population in many parts of Asia.
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