Australia
China
India
Singapore

Australia

Scaling fintechs attracting attention in Australia

Total investment activity (VC, PE and M&A) in fintech in Australia 2017–2020*

Source: Pulse of Fintech H1’20, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook), *as of 30 June 2020.

Australia is showing itself to be a strong fintech hub globally, with solid investments in H1’20 despite rising pandemic concerns, including a US$146 million raise by Airwallex and a US$130 million raise by Judo Bank.

Installment financing was a hot topic as Zip acquired US-based QuadPay and China-based mega-giant Tencent bought shares in Afterpay.

As fintechs in Australia aggressively work to scale, they are expected to drive increasing investment in the space. Additional offshore acquisitions are also expected as fintechs target international growth.

One area of fintech that continues to gain investor and funding support is the ‘buy now, pay later’ or instalment finance sector. Through COVID-19, more merchants are looking to enhance their e-commerce/POS options for their customers who have shifted their purchasing their activities to online/mobile.

Ian Pollari

Global Co-Leader of Fintech,KPMG International,Partner and National Banking Leader,KPMG Australia

China

Fintech investment in China remains stalled

Total investment activity (VC, PE and M&A) in fintech in mainland China 2017–2020*

Source: Pulse of Fintech H1’20, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook), *as of 30 June 2020.

Fintech investment in China dropped for the eighth-straight quarter in Q2’20, the US$285 million in fintech investment a shocking contrast from the peak high of US$20.7 billion in Q2’18.

The decline partly reflects the maturity of China’s fintech market, which is dominated by a small number of big players, in addition to changes to government fintech policies. Two of China’s mega-giants held secondary listings in Hong Kong (SAR) in H1’20, with Alibaba raising US$11 billion and JD.com raising US$3.9 billion.

In H1’20, the Chinese government enhanced interest in the lending space as it mandate local governments to open their data to fintechs in order to generate innovative lending solutions to support COVID-19 recovery.

Banks in Hong Kong (SAR) upping their game

After issuing licenses in 2019, there were big expectations for Hong Kong (SAR)’s digital banking space in 2020. While the launches of some of the recipient banks have been delayed due to COVID-19, the issuance of the licenses is forcing other banks in the region to up their digital game. This is driving increasing corporate investment as banks get ready to compete with more digitally-enabled competitors.

China’s economy has recovered a lot from COVID-19 although it is still a tenuous situation. Many fintech businesses have been negatively impacted. This is challenging for some of the smaller fintechs due to the need for extra funding to manage cash flow — funding that is difficult to obtain.

Andrew Huang

Patner and Fintech Leader,KPMG China

We’ve seen ESG investment appetite grow in the US and Europe and that trend is coming to Asia. A fintech ecosystem will emerge to meet the growing demand for robust ESG data, harnessing using new technologies such as IoT, Big Data, AI and blockchain. Hong Kong (SAR) is well-positioned to be a regional hub for this emerging industry, given its regional lead in securities trading.

Barnaby Robson

Partner, Deal Advisory,KPMG China

India

India: a key opportunity for fintech investors

Total investment activity (VC, PE and M&A) in fintech in India 2017–2020*

Source: Pulse of Fintech H1’20, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook), *as of 30 June 2020.

Despite COVID-19, India continued to see solid fintech investment in H1’20, led by a US$398 million angel investment in Navi Technologies, a US$300 million PE raise by Pine Labs and the US$185 million acquisition of PaySense by Netherlands-based PayU.

While the ongoing pandemic and challenges with international deal-making could put a damper on fintech investment in India in H2’20, the region is expected to remain a major opportunity for investors over the medium and long-term.

Pre-COVID-19, fintech-driven financial services especially in lending, insurtech and distribution has been attracting significant investments. COVID-19 has in fact fast tracked the digital economy and significant investments are being made by established banks and insurance companies, which can also lead to acquisition and more investments from investors.

Sanjay Doshi

Partner and Head of Financial Services Advisory,KPMG in India

Singapore

Government of Singapore driving fintech future

Total investment activity (VC, PE and M&A) in fintech in Singapore 2017–2020*

Source: Pulse of Fintech H1’20, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook), *as of 30 June 2020.

While fintech investment was down in H1’20 in Singapore, there was a significant amount of activity, particularly from the government. In order to help businesses through the current crisis, the government has pushed for more lending and microlending offerings to small and medium-sized enterprises (SMEs), whether by banks or by fintechs.

The government also continued to evaluate digital bank license applications, which could be issued in H2’20.

In Singapore, we’re seeing mature fintechs really securing big raises. So, while the total number of fundraising events has come down, the quantum per deal is a lot higher. We’re also starting to see some consolidations, particularly in the payments space. These are all signs of how the fintech market in Singapore and across Southeast Asia is really beginning to mature.

Tek Yew Chia

Partner, Head of Financial Services Advisory,KPMG in Singapore