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Asian fintechs a magnet for investments in Q1

They pull in US$2.7b, more than half the US$5.3b invested globally, according to Accenture
Tuesday, April 19, 2016 - 05:50

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More investments are flowing into financial-technology firms (fintechs) in the Asia-Pacific, mainly in China, a fresh report showed on Monday.

Singapore

MORE investments are flowing into financial-technology firms (fintechs) in the Asia-Pacific, mainly in China, a fresh report showed on Monday.

Fintechs in the region soaked up more than half the global investments in the first quarter of the year; an Accenture report put such investments in this region at US$2.7 billion, a decent chunk of the US$5.3 billion invested globally.

To be clear, North America remains the single-largest market for fintech funding, though the Asia-Pacific's share of it grew to nearly 20 per cent of global financing activity as at the end of 2015, up from just 6 per cent in 2010.

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This comes amid the US$1.2 billion fundraising completed in January by Chinese peer-to-peer (p2p) lender Lufax, which is controlled by Ping An Insurance. Investors in Lufax, the world's largest p2p lender with an estimated valuation of US$18.5 billion, included Bank of China Group Investment, Guotai Junan Securities Hong Kong and a unit of Minsheng Bank.

Chinese players have taken up the lion's share of fintech funding in the Asia-Pacific, with the focus now on the latest fundraising by Alibaba's Ant Financial Services Group. Ant Financial, said to be valued at more than US$50 billion, is expected to begin operations this year, upon its listing. But Accenture noted that Indian fintech players are also gaining in attraction in this region.

Payments are the most popular segment for fintech deals in Asia-Pacific, accounting for 38 per cent of the total. This comes amid rising collaboration between fintechs and incumbents, with the level of investment in fintechs wishing to collaborate with the industry more than doubling over the year. Investments targeting collaboration represented 44 per cent of all fintech investment last year, up from 29 per cent in 2014.

Accenture said: "Fintechs - from those who began as collaborative players to those who turned to collaboration after failing to compete effectively - are increasingly viewing incumbents as potential partners."

But large established fintechs are still muscling in, Accenture noted. Amazon, for example, is making loans to small businesses, using trading data and vendor reviews to make credit decisions.

"Given how fast the digital financial ecosystem is evolving, learning from and collaborating with firms such as Google, Apple, Facebook, Amazon and Alibaba will be high on the agenda for bank leadership," it said.

As it is, banks are deploying better technology to boost services, and not at a high cost. OCBC Group separately on Monday said it has extended its instant fingerprint access service to its mobile app for securities trading. This fingerprint authentication feature was developed for less than S$100,000, it revealed.

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