SINGAPORE (April 27): Investment in fintech companies in Asia has plunged from a high of US$8.6 billion (S$12 billion) in 2016 to just US$492 million in the first quarter of this year.
There were 33 fintech investment deals in Asia in 1Q17, compared with 199 deals in the whole of 2016.
According to the Pulse of Fintech Q1 2017 report published by KPMG, this was primarily due to “a lack of mega-deals which have been critical to peak quarters in the past”.
Outside of Asia, fintech investments are also slowing down.
Global investment in fintech companies around the world hit US$3.2 billion across 260 deals in 1Q17, falling 23% compared to the preceding quarter.
“Fintech investment in China declined in Q1 2017, as investors appear to have re-evaluated their portfolios,” KPMG says in the report. “The release of new government regulations for internet financing and P2P services may also have had an impact, as both investors and fintech companies need time to assess the ramifications of these changes.”
Meanwhile, KPMG says the fintech sector is gaining traction in Singapore, despite a slow start to the year.
“The MAS (Monetary Authority of Singapore) is driving Singapore’s rapidly expanding fintech market,” says Tek Yew Chia, Head of Financial Services Advisory, KPMG in Singapore.
Tek notes that Singapore’s central bank is “aggressively promoting and marketing Singapore as a fintech hub for the Asia market”.
The central bank has been working with startups and global corporates to develop and fund fintech activities, as well as collaborating with numerous international regulators to bridge regulatory barriers.
“It’s quite evident that the MAS wants Singapore to be a no-brainer location decision,” Tek says.
Heading into the second quarter, KPMG says artificial intelligence and blockchain are expected to remain big bets for fintech investors in Asia, alongside payments, open data and data analytics.
On top of these, KPMG says interest in regulatory technology (regtech) and insurance technology (insurtech) are also projected to increase.