Global investments in fintech ventures doubled last year to US$55.3 billion due to a surge in funding in China and gains in other markets according to a new Accenture report.
In Australia, fintech startups raised US$756.7 million last year, doubling the amount of $322.3 million in 2017. Accenture said this was driven by the US$350 million credit line to Judo Capital.
Locally there were 51 deals, down 14 per cent to the prior year 68 per cent of the investments in Australia went to lending startups, while those in payments accounted for 17 per cent.
The analysis included global financing activity from venture-capital and private-equity firms, corporations and corporate venture-capital divisions, hedge funds, accelerators, and government-backed funds.
Alex Trott, banking lead, Accenture Australia said, “With the Australian banking industry experiencing challenging times, suffering from diminished trust and against a demand for greater customer experiences, there’s a significant opportunity for financial technology firms, as recognised by this analysis, to partner with, as well as compete with, traditional financial firms.
“As the introduction of open banking fast approaches and with new banking licenses in the pipeline, further investment in Australian fintechs is likely to accelerate as the start-ups look to take advantage of their leaner and more agile structures to gain new market share in transactions, retail banking and lending.”
Trott said there is also an opportunity for financial technology innovations in the wake of the Banking Royal Commission, with various local fintech players working to improve remediation and compliance through artificial intelligence and other emerging technologies.
Accenture analysed CB Insights data showing the growth in fintech investments in China jumped to US$25.5 billion in 2018, accounting for 46 per cent of all fintech investments that year.
More than half of China’s fintech investment came from the US$14 billion funding round in May of Ant Financial.
Richard Lumb, group chief executive – financial services at Accenture said, “Even with the current volatility in global markets and ongoing macroeconomic concerns, investment in the fintech sector remains strong.
“The demand for fintech innovations by banks and other financial services companies continues to grow as they face regulatory and capital pressure; competition spurred by open banking from new entrants, including big tech and neo-banks; and new and evolving security threats.”
The number of fintech deals grew significantly, to 3,251 globally — up approximately 19 per cent from 2017 — as venture capital investors, private equity firms, traditional banks and insurers combed the world for the newest technologies in payments, banking and wealth management.
Piyush Singh, senior managing director of financial services for Africa, Middle East & Turkey, and Asia Pacific at Accenture said, “Even if you discount the massive Ant Financial transaction, we’d still have a record year for global fintech fundraising, with strong activity in many corners of the world, so these are broad-based gains.
“It’s hard to tell whether we’ll be able to keep up with this pace of torrid growth, but one thing is for sure: many investors have woken up to the fact financial technology can add a lot of benefits to businesses and consumers alike both in developed and developing markets, which is why we keep seeing an increase in fintech activity.”