APAC attracts $9.6 bn of fintech investments

China & Hong Kong take the bulk; India comes next, but well behind

Investments in Asia-Pacific financial technology (fintech) ventures reached $9.62 billion as of July 31, more than twice the $4.26 bn invested in the region in all of 2015, according to an Accenture analysis of CB Insights data.

China tops with total investment of $9 bn and India comes next with $339 million. Investments in the Asia-Pacific eclipsed North America, which, as of July 31, garnered $4.58 bn in fintech; Europe attracted $1.85 bn. However, deal volume remains higher in North America and Europe, as the Asia-Pacific increase is large due to big investments at select fintech companies in China. There have been 192 deals in the Asia-Pacific so far this year, as compared with 509 in North America and 230 in Europe.

In fact, the top 10 investments in Asia-Pacific fintech ventures were in China and Hong Kong, 90 per cent of overall flow into the region and valued at $8.75 bn. In total, China and Hong Kong fintech ventures have attracted $9 bn in investments so far this year.

“China’s established companies, rather than nascent start-ups, are at the forefront of the fintech trend in the region,” said Beat Monerrat, Accenture's senior managing director for this segment in the Asia-Pacific. “Fintech companies with major backers such as Alibaba and JD.com are focused on providing positive end-to-end customer experiences, including payments and lending. This is transforming China’s financial services industry and is consistent with the global ‘Fourth Industrial Revolution’, which is bringing innovation from non-traditional competitors to the financial services industry.”

Ant Financial Services Group, part of e-commerce giant Alibaba Group Holding that operates China’s major online payments platform, Alipay, closed a $4.5-bn fundraising round in April. The Ping An-backed Lufax, which has started using the name Lu.com, completed a $1.2 bn round in January.  

The same month, China’s second largest e-commerce company, JD.com, raised $1 bn in new funding for its consumer finance subsidiary, JD Finance.

In recent years, major Alibaba affiliates and China’s biggest social network company, Tencent, have also invested in other smaller start-ups, such as Fenqile, a micro-loan site (which literally means 'happy instalments'), at Qufenqi, an electronics retailer that lets buyers pay in monthly instalments, and India’s One97 Communications, a mobile internet company whose Paytm is its flagship brand.

“The fintech trend in China continues to skew toward online payments and lending, including peer-to-peer, which is creating market-share dilution for banks,” said Albert Chan, managing director for China financial services at Accenture.

“China’s banks, whether building their own competitive platforms or not, should consider investing in collaborative fintech ventures to remain competitive.”