Investment grows in Australia’s Fintech sector | KPMG | AU
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Investment continues to grow in Australia’s Fintech sector

Investment grows in Australia’s Fintech sector

Investment in Australia’s fintech sector followed the upwards tick of global growth patterns in the first half of 2018, with US$63.7 million invested, up from US$56.1 million in 2H’17 and US$56.0 million in 1H’17, though remained lower than the highs recorded in 2H'15 and 1H'16 according to KPMG’s Pulse of Fintech report.

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  • Overall global fintech investment roared ahead at a record pace in the first half of 2018, reaching US$57 billion
  • Australia saw US$63.7 million invested in 1H’18, a rise on the previous period

 

Much of the investment in Australia, however, is concentrated across a small number of deals. Australia saw just seven deals during the period, down from 12 in 2H’17 and 16 in 1H’17. Total VC, PE and M&A investment amounted to US$171.5 million, across 14 deals.

"Significant outliers still dominate the Australian fintech ecosystem, propelling the majority of this growth, such as the Rubik Financial deal in the past and, most recently, the acquisition of financial data analytics provider Hometrack Australia for roughly US$97 million by REA Group," says Astrid Raetze, Partner and Head of Australian Fintech, KPMG Australia.

Globally, US$57.9 billion was invested across 875 deals, a significant increase from the USD$38.1 billion invested in all of 2017. But as with Australia, the surge in fintech funding was driven in part by two large deals: the record-setting US$14 billion raise by Ant Financial in Q2’18 and Vantiv’s acquisition of WorldPay for US$12.9 billion in Q1’18.

The KPMG report has identified a number of key investment trends, including the strength of the overall Asian region, as well as emergent technologies such as regtech and blockchain.

Asian tigers roar

India, Australia and Singapore all recorded quarter-over-quarter increases. After a solid US$2 billion in H2’17, total fintech funding in Asia surged to US$16.8 billion across 162 deals in H1’18 powered by a massive US$14 billion Series C VC funding round by Ant Financial.

Regtech and Open Banking set to shine in Australia

The regtech sector got off to a hot start in H1’18, with US$1.37 bil invested, already surpassing the 2017 total. Regtech investment was spurred by the introduction of GDPR, PSD2 and Markets in Financial Instruments Directive II in Europe. Ongoing changes associated with open banking in markets such as the UK, Mexico and Australia will likely continue to buoy investment over the remainder of the year and into 2019.

Blockchain entering real world

Blockchain continued to draw a significant amount of attention from investors in H1’18, with investment typically focused on more experienced companies and consortia looking to obtain additional rounds rather than on new market entrants. Large rounds in blockchain companies were seen worldwide during the first half of 2018, including US$100 million plus rounds to R3 and Circle Internet Finance in the US, and US$77 million to Ledger in France.

Future outlook

The outlook for fintech investment remains positive. "With a significant amount of capital waiting to be deployed, a growing diversity of fintechs hubs across the globe, and more corporates looking to seize on larger M&A opportunities, investment in fintech is expected to remain strong heading into the second half of 2018," said Ian Pollari, KPMG Australia’s Head of Banking and Global Co-lead for Fintech.

“Not only are we going to see more investments in individual technologies like AI and emerging subsectors like regtech, we will also see efforts to combine fintech capabilities and to embed them within broader service offerings, through different commercial structures, particularly in areas such as open banking and digital mortgages."

For further information

Ashford Pritchard
0411 02 0680
apritchard2@kpmg.com.au
 

About KPMG Fintech

The Financial Services industry is transforming with the emergence of innovative new products, channels and business models. This wave of change is driven by evolving customer expectations, digitalisation, as well as continued regulatory and cost pressures. We are passionate about supporting clients to successfully navigate this transformation, mitigating the threats and capitalising on the opportunities. KPMG Global Fintech comprises professionals in over 45 fintech hubs around the world, working closely with financial institutions and companies, to help them understand the signals of change, identify the growth opportunities and to develop and execute on their strategic plans.

About KPMG International

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 154 countries and territories and have 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such

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