China and Hong Kong gobble up US$9 billion in Fintech investments in 1H 2016

Caption: 
photo courtesy of iStockphoto

Investments in Asia-Pacific (APAC) financial technology (Fintech) ventures, primarily in China, reached US$9.62 billion as of July 31, 2016 – more than twice the US$4.26 billion invested in the region in all of 2015, according to Accenture’s analysis of CB Insights data.

The investments in APAC eclipsed investments in North America which picked up US$4.58 billion in Fintech investments over the same period. Europe attracted US$1.85 billion in the same period.

What characterized the APAC investments are the relatively fewer companies that received funding during this period – a total of 192 deals compared with 509 in North America and 230 in Europe.

The top 10 investments in APAC Fintech ventures occurred in China and Hong Kong, accounting for 90% of all investments in the region and valued at US$8.75 billion. China and Hong Kong Fintech ventures have attracted US$9 billion in investments so far in 2016.

Beat Monnerat, Accenture senior managing director, Financial Services Asia-Pacific“China’s established companies, rather than nascent startups, are at the forefront of the Fintech trend in the region,” said Beat Monnerat (photo right), Accenture senior managing director, Financial Services Asia-Pacific.

“Fintech companies with major backers such as Alibaba and JD.com are focused on providing positive end-to-end customer experiences, which includes payments and lending. 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,” he added.

Figure 1: Fintech investments in Asia Pacific

Fintech Investments in Asia Pacific up to 1H2016

Source: Accenture Research analysis on CB Insights data

In April 2016, Ant Financial Services Group, the financial-services affiliate of e-commerce giant Alibaba Group Holding that operates China’s online-payments platform Alipay, closed a US$4.5 billion fundraising round. 

Ping An-backed Lufax (now branded as Lu.com) completed a US$1.2 billion round of fundraising in January, the same month, China’s second largest e-commerce company, JD.com, raised US$1 billion in new funding for its consumer finance subsidiary, JD Finance.

In recent years, major Alibaba affiliates and China’s biggest social network company, Tencent, have also invested in other smaller startups, such as Fenqile, a micro-loan site which literally means “happy instalments,” Qufenqi, an electronics retailer that lets buyers pay in monthly instalments, and India’s One97 Communications, a mobile internet company whose Paytm is its flagship brand.

Figure 2: China dominates APAC Fintech Investments

China dominates Fintech investments in APAC

Source: Accenture Research analysis on CB Insights data

Albert Chan, managing director financial services China, Accenture“The Fintech trend in China continues to skew toward online payments and lending, including peer-to-peer (P2P), which is creating market-share dilution for banks,” said Albert Chan (photo left), managing director financial services China, Accenture. “China’s banks, whether building their own competitive platforms or not, should consider investing in collaborative Fintech ventures in order to remain competitive.”

 

Feature image courtesy of iStockphoto.

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