Acquisition of Australia-based eNett top fintech deal in Asia-Pacific in H2’20

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

Source: Pulse of Fintech H2’20, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook), *as of 31 December 2020.

Australia had a robust year for fintech investment, with a very strong Q4’20 that included the $577 million acquisition of B2B payments company eNett by US-based WEX, a $209 million funding round by new Judo Bank and an $84 million raise by solar power financing company Brighte.

Fintech companies in Australia continued to see strong interest from investors, particularly in areas like payments, business lending and installment finance ((Buy Now Pay Later), which has seen substantial growth in the local market with leading Australian players AfterPay and Zip continuing their expansion offshore (US, UK, Canada, etc)).

H2’20 saw Australia-based investment platform STAX complete the first crypto-backed IPO for West Coast Aquaculture.

The Australian fintech market is incredibly vibrant and it’s gaining a lot of traction from investors both locally and on the global stage. Funding rounds are getting larger, fintech valuations are growing, and we’re beginning to see some strong exits.

Ian Pollari

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


Dominant players and evolving regs drive fintech investment in China to 7-year low

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

Source: Pulse of Fintech H2’20, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook), *as of 31 December 2020.

Total fintech investment in China was incredibly soft in 2020, with just $1.6 billion. The decline reflects the significant maturity of China’s fintech sector, particularly in the payments space which is dominated by a small number of tech mega giants.

Incumbent banks in China made significant investments internally in 2020 in order to transform their digital capabilities. Several also continued to set up subsidiaries in order to build their capabilities and provide B2B digital banking services to smaller institutions.

Insurtech continued to gain traction among investors; in H2’20, Shuidi – a crowdfunding platform focused on medical expenses – raised two rounds totaling $380 million. ‘Digitalization’ is currently the buzzword in China’s insurtech industry; digital transformation of the insurance industry is being driven by the government, insurance companies and technology companies. Insurance service providers are therefore likely to see structural reform continue, with more emphasis placed on risk prevention through innovative methods that would lower risks.

In H2’20 there were multiple draft and final announcements from government and regulatory bodies which have implications for fintech investments in China. These include interest rate caps, antitrust provisions, data privacy restrictions, amended capital requirements for online lenders, loan size caps and so on. Ultimately these measures contributed to the deferment of the Ant Financial IPO (had it proceeded this was on track to be the largest fintech listing in history), and a ‘wait and see’ approach to fintech investment activity.

In China, we are seeing growth in a number of emerging fintech sectors, including blockchain, regtech and wealth management. One big change we have seen in 2020 has been the focus of these fintechs – with many now focusing their efforts on empowering traditional financial institutions rather than providing direct to consumer products.

Andrew Huang

Partner and Fintech Leader,KPMG China

Fintech IPOs on the horizon in Hong Kong (SAR)

A majority of the eight digital banks licensed in Hong Kong (SAR) launched services over the course of 2020; while their impact will take time to understand, they have already driven incumbent banks in Hong Kong (SAR) to up their game in terms of apps, user interfaces, products and services.

The technology IPO market in Hong Kong (SAR) was robust in 2020; while Ant Financial cancelled its Hong Kong-Shanghai dual listing, unicorn fintechs are increasingly considering IPOs.

Pandemic-era accelerated growth and loose monetary policy has driven up stock-market valuations for tech companies. Shareholders of privately owned fintech groups recognize there is a window to list at excellent valuations, and we expect significant IPO activity in 2021/2022.

Barnaby Robson

Partner, Deal Advisory,KPMG China


Despite pandemic challenges, India sees second-best year for fintech funding

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

Source: Pulse of Fintech H2’20, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook), *as of 31 December 2020.

India attracted $2.7 billion in fintech investment in 2020, the second highest amount ever next to 2019’s peak of $3.5 billion. While a majority of India’s fintech investment came early in the year, H2’20 saw merchant platform Pine Labs and Razorpay each raised $100 million.

Payments remained the hottest area of investment, followed by insurtech and wealthtech.

Fintech investors adjusted their strategies in H2’20, moving away from both early stage companies and lending-based businesses and towards later stage companies; investors also focused more on profitability.

Competition in the insurance space started to heat up as incumbent insurers enhanced their digital focus due to COVID-19 and niche payments players like Paytm worked to expand into insurance.

To boost digital transactions and the fintech industry, the government has proposed significant support in their recent budget announcements, which include a scheme to develop, promote and accelerate digital payments, following a sharp growth in online and contactless payments during the COVID-19 led lockdown months. Also, a fintech hub at Gujarat International Finance Tec-City, will be set up to encourage and develop innovative financial technology services and products.

Many of the banks in India are now going down the path of digital. They are really looking at tech and fintech companies that can help them move their digital activities forward, either investing in them directly or using them as service providers. That is going to be a big growth area for investment here in India – banking-as-a-service platforms.

Sanjay Doshi

Partner and Head of Financial Services,KPMG in India


Singapore distributes first digital banking licenses

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

Source: Pulse of Fintech H2’20, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook), *as of 31 December 2020.

As banks pivoted to online due to COVID-19, digital client onboarding became critically important, with banks and other financial institutions looking for ways to enhance their digital ID processes in order to comply with the country’s strong regulations.

Platform companies like Grab are gaining a lot of attention in Singapore as they look to build ecosystems of services for their clients, including financial services.

The Monetary Authority of Singapore (MAS) issued its first two digital banking licenses in H2’20 – to the Grab-Singtel consortium and to tech giant SEA. It also issued two digital wholesale bank licenses.

When COVID-19 hit and people started to work from home, cybersecurity really came to the forefront for a lot of businesses, including financial institutions. This has led to a lot of cybersecurity companies thinking about how companies can manage risk and vulnerabilities and maintain their operational resilience given their dispersed workforce.

Gary Chia

Partner and ASEAN Financial Services Regulatory and Compliance Practice Leader,KPMG in Singapore