Asia-Pacific sees $3.5 bn in fintech investments in first nine months of 2015

An Accenture report says number of deals in the segment hit 122 as of 1 October 2015

Moulishree Srivastava
First Published5 Nov 2015
Accenture also predicts that investment in cyber security will increase significantly in the coming year, especially in light of recent large-scale data breaches reported in the media. Photo: Hemant Mishra/Mint<br />
Accenture also predicts that investment in cyber security will increase significantly in the coming year, especially in light of recent large-scale data breaches reported in the media. Photo: Hemant Mishra/Mint

New Delhi: Investments in the financial technology space, also known as fintech, in the Asia Pacific region grew to $3.5 billion in first nine months of 2015 from $880 million in 2014, said a new report by technology services company Accenture Plc. on Wednesday.

Fintech companies offer technologies for retail, commercial and investment banks, insurers, asset managers and payment services providers in addition to alternative providers of financial services such as digital currency exchanges.

In a report titled ‘Fintech Investment in Asia-Pacific set to at least quadruple in 2015’, Accenture said the largest share, about 40%, of Asia-Pacific fintech investment deals in 2015 were seen in payments, while the lending space got 25% of the total fintech investment.

“We are seeing the convergence of two trends: venture capitalists are clearly signalling fintech is a growth opportunity and simultaneously financial services companies are waking up to the vast opportunities created by the current wave of fintech,” said Jon Allaway, senior managing director of Accenture’s Financial Services group in Asean (Association of Southeast Asian Nations).

Financial services institutions are rapidly embracing cloud technology and mobile wallets among other things to fundamentally redefine their business and operational models, he said.

“We are seeing this in the increased investments from banks in fintech venture capital funding, incubators and start-ups,” he added.

The total number of deals in the segment reached 122 as of 1 October 2015 as opposed to 117 for all of 2014. What is more significant is that the value of deals has increased substantially, driven by larger investments in and from China.

These include investments from Alibaba Group Holding and its Ant Financial Services Group subsidiary into Paytm, an Indian mobile payment and commerce platform, in September 2015. Earlier, in February this year, Paytm struck a deal to raise up to $575 million from Ant Financial.

“The increasing deal size should serve as a wake-up call to financial services companies in China and across Asia-Pacific that if they do not offer truly useful, customer-friendly digital solutions, competitors will step into the breach not just on the retail front but also in commercial transactions,” said Beat Monnerat, senior managing director at Accenture and the company’s Asia-Pacific financial services lead.

“Identifying potential areas for more fintech innovation is a key function of our fintech labs,” said Allaway. “For start-ups, the opportunity is unparalleled: they get to hear from 12 different banks on what those banks need; for the banks, the mentoring helps them identify solutions that are coming to the market soon that may be able to help them serve their customers better.”

Accenture also predicts that investment in cyber security will increase significantly in the coming year, especially in light of recent large-scale data breaches reported in the media.

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