Fintech investment in China hit a record high in the first half of 2018, buoyed by record-setting fundraising and a number of massive deals, finds KPMG’s latest Pulse of Fintech report.
The USD 14 billion Series C funding round by Ant Financial in Q2 2018, together with four other USD 100 million+ fundraising deals, lifted China’s mid-year fintech investment to USD 15.1 billion. This is almost equal to the combined amount of fintech investment in China between 2013 and 2017. A total of 34 fintech investments were conducted in H1 2018, an increase from 15 in H2 2017.
This massive outlier deal and eight other USD 1 billion+ megadeals propelled total global fintech investment to USD 57.9 billion in H1 2018. This already exceeds the USD 38.1 billion fintech funding seen in 2017 worldwide, and is on track to exceed 2015’s peak of USD 62.5 billion.
Arthur Wang, Head of China Banking, KPMG China, says: “We are seeing large technology companies in China enabling financial institutions. Rather than entering the market independently, they are finding ways to use their technology to serve customers better — making them ‘techfins’ rather than ‘fintechs’.”
In addition, the majority of banks in China have been increasing their focus on digital and developing transformation strategies, offering opportunities for B2B-focused fintechs to enable banking transformation, the report finds. Banks have invested in areas including blockchain, big data and artificial intelligence (AI).
Separately, a number of large fintechs — primarily from China — are focusing on countries in Southeast Asia as the next step in their growth agenda after achieving success domestically, the report says.
With a large population, relatively similar macroeconomics, large underbanked populations and a significant number of Chinese people living overseas, Southeast Asia is seen as a strong stepping stone to further global expansion.
Wang concludes: “Asia is well-positioned for continued growth in fintech investment for the rest of this year. There will likely be a strong focus on global expansion among the larger, more mature fintechs. Blockchain and AI will likely continue to be key priorities for fintech investors, in addition to insurtech and regtech.”
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