A drop in global fintech investment has been linked to a “lack of massive deals” and APAC tensions, despite domestic optimism for the second half of 2019 on display in a new report.
KPMG’s The Pulse of Fintech 2019, a biannual global analysis of investment in fintech, considered Asia Pacific as accountable for the vast majority of the global decline in fintech funding.
The dip in cashed-up investments comes after a record-setting 2018, it was noted, with the steep drop-off in investment reflecting a lack of blockbuster deals, such as the US$14-billion raise by Ant Financial or Vantiv’s acquisition of Worldpay for US$12.9 billion in 2018.
Noting much lower fintech deal volume and the amount of investment into fintechs, the KPMG report said that “trade tensions, combined with changing fintech regulations and Beijing’s increasing focus on the industry, made many fintech investors in mainland China more hesitant over the first half of the year”.
Despite the prominence of Chinese regulatory scrutiny and US-China trade tensions, the report said it had observed “the continued maturation of the fintech industry as a whole and the broadening of its definition”.
Areas including wealthtech, proptech and regtech are all growing on the radar of investors, it was highlighted.
For Australia in particular, KMPG noted that ASIC is currently funding studies to investigate how NPL could help detect misconduct and improve regulation.
Despite a drought of fintech IPOs in the Asia-Pacific region, Australia has showcased one exception, with Prospa, one of Australia’s largest fintech companies, having held a successful IPO in June.
Commenting on Australia’s fintech positioning, KPMG Australia’s partner and head of fintech, Dan Teper, said the success of Australian fintechs is likely to encourage new investors to the market.
He considered the dip in fintech investment in Australia “more of a pause”, with major activity imminent for the second half of the year.
“Beside VC investment in fintech startups, there is also the possibility of future listing and M&A activity following the success of fintech IPOs such as Prospa and Afterpay. Their experience could encourage other fintech companies to consider IPOs,” Mr Teper said.
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