Increasingly, Asia-Pacific (APAC) countries are developing thriving financial technology (fintech) scenes, attracting investors from all over the world. Htet Tayza comments on new data, which indicates that APAC countries saw fintech investment soar during the opening six months of 2016.
Rising fintech market
Earlier this year, global professional services company Accenture released a report, which indicated that over the course of 2015, global investment in fintech rose by 74%, to hit US$22.3bn. Analysis indicates that worldwide fintech investment growth was driven by APAC nations, which managed to attract an impressive US$4.26bn throughout 2015, quadrupling from the year before.
Soaring investment volumes
Industry publication Finextra writes that according to a new report from Accenture, APAC fintech investment volumes climbed even further during the first six months of 2016. Within this period, investment hit a staggering US$9.6bn, roughly double the total figure for last year.
Accenture noted that APAC fintech volumes for the first half of the year have eclipsed both North America (US$4.58bn) and Europe (US$1.85bn). Yet deal volumes remain higher in both North America and Europe. Over the opening six months of 2016, there were 509 fintech deals in North America, 230 in Europe, but just 192 deals within the APAC region.
China’s prominent role
APAC fintech investment volumes received a massive boost from China and Hong Kong. Accenture found that these territories comprised 90% (US$8.75bn) of APAC fintech investments in the first half of 2016. Commenting on this news, Accenture’s Senior Managing Director for Financial Services in the APAC region, Beat Monnerat, explained:
“China’s established companies, rather than nascent start-ups, are at the forefront of the fintech trend in the region… This is transforming China’s financial services industry and is consistent with the global ‘Fourth Industrial Revolution’, which is bringing innovation from non-traditional competitors to the financial services industry.” Chinese fintech fundraising was led by e-commerce giant Alibaba’s financial-services affiliate Ant Financial Services Group, at US$4.5bn.
These affiliates and Tencent, China’s biggest social media firm, have also invested in online and peer-2-peer payments-orientated start-ups in recent years. Issuing advice for local banks, Accenture’s Managing Director for Chinese Financial Services, Albert Chan, said: “China’s banks, whether building their own competitive platforms or not, should consider investing in collaborative fintech ventures in order to remain competitive.”
Htet Tayza’s commentary
It is clear that increasingly, APAC nations are gradually developing fintech industries which can compete on the world stage. However, APAC fintech activity is somewhat dominated by China. Data quoted by the Consultative Group to Assist the Poor (CGAP), a body which strives to promote financial inclusion globally, indicates that China holds major potential for fintech investors.
The number of Chinese citizens with a bank account increased by 15% from 2011 to 2014, hitting 80% of the population. CGAP explains that this rise was partly spurred by increased internet access, allowing companies such as Alibaba to create new fintech-based solutions for consumers. For instance, CGAP’s data suggests that 19% of Chinese account holders now execute payments via mobile, illustrating that there is a strong and growing market for fintech in the People’s Republic.
China may be driving APAC fintech investment right now, but many other countries throughout the region possess incredible potential. The Association of South-East Asian Nations (ASEAN), for instance, is set to become the world’s fourth largest economy by 2030. Furthermore, Asian governments such as Singapore are currently developing a competitive regional fintech market. With so much potential, APAC fintech investment could climb far higher throughout the rest of the decade and beyond.