APAC fintech financing outpaces North America in 2016

Source: Accenture. Chinese activity dominated in 2016.

Global investment in financial technology (fintech) ventures grew 10% in 2016, to US$23.2 billion, driven primarily by a wave of blockbuster deals in China, according to Accenture analyses* of data from CB Insights, a global venture-finance data and analytics firm.

Fintech financing in Asia-Pacific in 2016 eclipsed that of North America for the first time, more than doubling, to US$11.2 billion from US$5.2 billion in 2015. In contrast North America attracted US$9.2 billion in fintech financing in 2016, and Europe US$2.4 billion.

The number of fintech deals rose in all major geographies, to nearly 1,800 from approximately 1,200 in 2015. However, the growth in total value of fintech investments was due mainly to mainland China and Hong Kong, where just 3% of the deals accounted for nearly 43% of total fintech investment globally.

“Over the last five years, global fintech financing activity has grown by 56% per annum,” said Richard Lumb, Group Chief Executive – Financial Services at Accenture.

“For many years Silicon Valley, New York and London were the dominant centres of innovation and demand, but now fintech has spread like wildfire around the world, and Asia-Pacific has become the rising star.

"The swing of investment from west to east is largely driven by the greater opportunity for new entrants to use fintech to define the new fabric of the industry than in the west. As a result, global competition among fintech ventures has never been greater, and financial institutions that are equipped to tap these ventures for innovation are better positioned than ever.”

China and Hong Kong alone accounted for US$10.2 billion, or 91% of Asia-Pacific’s US$11.2 billion in fintech investments in 2016, due to several blockbuster deals. In fact, all of the 10 largest fintech investments in Asia-Pacific last year were in China and Hong Kong; together those 10 deals accounted for 82% of all Asia-Pacific fintech investment in 2016.

Leading the deals was Ant Financial Services Group – the financial-services affiliate of e-commerce giant Alibaba Group Holding that operates China’s online-payments platform Alipay. The company closed a US$4.5 billion fundraising round in April.

Ping An-backed Lufax, which is now using the name Lu.com, completed a US$1.2 billion round of fundraising in January 2016. In the same month, China’s second largest e-commerce company, JD.com, raised US$1 billion in new funding for its consumer finance subsidiary, JD Finance.

Alibaba and JD.com have to give customers end-to-end services including payments and lending, said Albert Chan, MD, financial services China, Accenture.

He said, “Well aware that they’re facing disruption from outside the industry, many of China’s financial services companies are making investments in fintech companies and exploring cutting-edge solutions such as Blockchain technology. The result is robust competition in payments and lending from non-traditional players and established financial institutions working collaboratively with startups to explore fintech solutions in other parts of the business.”

*Accenture’s analysed fintech investment-data from CB Insights, a global venture-finance data and analytics firm. The analysis included global financing activity from venture-capital and private-equity firms, corporations and corporate venture-capital divisions, hedge funds, accelerators, and government-backed funds. The data ranged from 2010 through 2016. Fintech companies are defined as those that offer technologies for banking and corporate finance, capital markets, financial data analytics, insurance, payments and personal financial management.

posted from Bloggeroid