Given the growing interest in fintech globally, and its ongoing evolution in terms of market drivers, technologies and use-cases, KPMG is bringing you the 'pulse' of fintech investment globally.
Each quarter, we highlight closed fintech deals, issues and challenges seen around the world, in addition to key trends and insights related to fintech in key regions: North America, Europe and Asia, including coverage of the Australian marketplace. Recognising the growth of the fintech sector, the report covers research of all investment classes – M&A, including Private Equity (PE), as well as Venture Capital (VC) investments.
Highlights from the Q2’17 report
- Fintech investment has made a comeback this quarter: Globally, the fintech market made a strong rebound in Q2’17, with total investment more than doubling over Q1’17 to US$8.4 billion, buoyed by strong M&A activity.
- VC funding has held relatively steady: Global VC funding to fintechs declined slightly, with just over US$2.5 billion in VC funding raised by fintechs in the quarter across 227 deals.
- Corporate participation continues to soar in Asia: Corporate VC investment in Asia grew from 22.5 percent in Q1’17 to a record high of 36.6 percent in Q2’17, revealing a deep interest in fintech innovation from strategic players in Asia.
- Asia funding remained steady amid continued absence of megadeals: Total fintech funding in Asia remained relatively steady quarter over quarter, with US$760 million invested during Q2’17, compared to US$790 million in Q1’17. Asia’s Q2 fintech financing trends were characterised by geographic diversity and a lack of mega-financings.
- Australian investment bounces back: After being relatively subdued for several quarters, investment in the Australian fintech scene rebounded significantly to US$115 million in Q2’17 from US$20 million in Q1’17, with overall value being significantly skewed by the AUD$68 million acquisition of Rubik Financial by Temenos.
- Regtech investment is on pace for a record year: The US$591 million invested in regtech in the first half of 2017 already exceeds the US$583 million raised during all of 2015, and is on pace to significantly exceed 2016’s total by year end.
- Trends to watch globally: Business-to-business (B2B) related fintech investments gained prominence during the quarter, prompted by growing recognition that many traditional financial institutions and insurance companies need to reduce their cost base. This has led to an increase in corporate interest in technologies that can enable more efficient back office functions, such as artificial intelligence (AI), robotics, regtech, data & analytics and cloud services. With open banking regimes approaching in the UK and Europe, there will also be increasing interest in fintechs that can help banks develop API offerings and platforms that can succeed in an open banking environment
In this issue of the report, we also explore a number of questions permeating the fintech market today, including:
- Will the fintech market continue to rebound?
- Is the focus of fintech investment shifting from front office to back office?
- When will blockchain show it can be commercialised?
- What are the major opportunities driving investment in insurtech.