SINGAPORE (Nov 16): Venture capital-backed funding for fintech in Asia grew 50% q-o-q to US$1.2 billion ($1.7 billion) in 3Q16, even as global investments in fintech declined for a second consecutive quarter.
This is according to the Pulse of Fintech quarterly report jointly released on Wednesday by KPMG International and CB Insights.
Asia’s fintech start-ups claimed all of the top four biggest investments in 3Q16.
China’s Qufenqi, 51Xinyongka, and Firstp2p led the way with funding of US$449 million, US$310 million, and US$70 million, respectively.
They were followed by India’s One97 Communications, which received funding of US$60 million in the quarter.
“Asian investors are seeing the potential of fintech amidst global uncertainty in an environment of moderating growth,” said Chia Tek Yew, Head of Financial Services Advisory, KPMG in Singapore.
“As businesses continue to embark on the journey of transformation, interest and investment in Asia’s fintech sector will continue to be strong, particularly in areas like payments technology, insurance technology and regulatory or risk technology,” Chia adds.
Year-to-date, fintech in Asia has raked in some US$4.7 billion in investment, and looks set to break the record high of US$4.8 billion recorded in 2015.
Meanwhile, fintech funding in North America fell below the US$1 billion mark for the quarter. Venture capital-backed start-ups raised some US$0.9 billion in 3Q16 even as the number of fintech deals dropped 5% q-o-q to 96 deals.
In Europe, fintech funding fell 43% in 3Q to US$233 million.
In total, global VC-backed fintech funding of US$2.4 billion was 17% lower q-o-q, while deal activity fell 12% q-o-q to 178 deals in the quarter ended Sept.
“While we continue to see significant investment into fintech companies globally, the euphoria for mega-deals that we saw into the latter half of 2015 has waned,” says CB Insights CEO Anand Sanwal.
“Total investments to key areas like marketplace lending and blockchain technology have both seen declines heading into the tail-end of 2016,” Sanwal adds.
However, KPMG and CB Insights add in the Pulse of Fintech report that “the future of fintech remains positive from an investment perspective, with an uptick expected in 2017”.
“Investors are expected to become more confident as the immediate ramifications associated with Brexit ease and uncertainties in the US stabilize. Consequently, they will begin to deploy capital that has been deferred over the past few quarters,” it adds.