China dominates Fintech Investments in H1 2016

FREMONT, CA: KPMG –a network of professional firms providing Audit, Tax and Advisory services – and CB Insights –a National Science Foundation backed software as-a-service company –publishes “The Pulse of Fintech- Q1 2016” report. The report analyzes the latest global trends in venture capital investment data on the fintech sector.

According to the report, capital flowing into venture capital (VC)-backed Fintech companies has driven Fintech investments in Asia to a new high in the first quarter of 2016. Especially China picked up US$2.4 billion in investments during the quarter from nine deals, an 8-fold increase from the previous quarter.

James Mckeogh, Partner, KPMG China, believes Asia has multiple opportunities for leveraging innovative Fintech companies to helpimprove efficiencies with current business models and also address market needs which are not currently being fulfilled by the incumbents.

The key finding from the report includes – what is driving the ongoing strength of VC investment in fintech, why is Europe lagging behind the US and Asia when it comes to investment in fintech.

China continues to drive the vast majority of fintech investment in Asia; other countries are working to expand their own fintech hubs, including Hong Kong, Singapore, India and Australia in the Asia Pacific region. As part of the government’s US$19 billion Research Innovate Enterprise 2020 Plan to foster innovation, the MAS recently launched a National Research Foundation Fintech Office as a one-stop virtual entity to support all Fintech investment in Singapore.

Q2 2016 may be just as big as Q1 by some early indications including an early quarter round funding of US$4.5 billion by Ant Financial in China which closed in April 2016, making it the largest single private funding round to a Fintech company. The report recognized that the Ant Financial deal is an outlier but also suggests that the breadth of offerings and subsectors taking root across Asia may be signs of substantial Fintech investment in the region in the foreseeable future.