After a drop off in the last quarter of 2015, Asia has broken new funding highs in the first quarter of 2016, suggesting that substantial financial technology investment in the region is expected for the foreseeable future.
In a report created by KPMG Enterprise and KPMG Fintech along with CB Insights, named «The Pulse of Fintech,» the report found that the Asian quarter’s success was primarily down to two $1 billion plus funding rounds to China-based companies Lu.com and JD finance. The total investment for the first quarter of 2016 hit a new record of $2.6 billion.
While China continues to be the engine for the vast majority of fintech investment in Asia, Hong Kong, Singapore, India and Australia are also seeing success as they continue to expand and calibrate their own fintech hubs. After a law change in Japan allowing banks to acquire non financial companies, Tokyo is expected to follow suit with more funds going into financial and insurance technology innovations.
Accelerator Fatigue
Banks in Asia have also been increasing their participation ramping up partnerships, acquiring tech firms and expanding their in-house innovation programs.
Standard Chartered, DBS and Commonwealth Bank have all established their own Accelerators, however the report found that some «accelerator fatigue» was beginning to be felt.
Insurance Labs
The Asian insurance industry has also seen a stepping up of direct investment with players such as Zurich and Allianz announcing tech initiatives.
«InsuranceTech has really taken off in the last 6 months both in terms of new innovations and investment. From a corporate perspective, many large insurance companies are investing in tech companies and building innovation labs to bring that innovation back into their core business,» said Jan Reinmueller Principal Advisor, and Head of Innovation Ventures, KPMG in Singapore.
Governments Jump In
In Southeast Asia, marketplace lending platforms continued to attract investment attention, primarily for their ability to provide financing for small businesses and to address the needs of the underbanked or unbanked in the region.
Governments in the region have also become proactive in supporting fintech innovators and investors. For example, the Monetary Authority of Singapore (MAS) recently launched a National Research Foundation «Fintech Office» as a one stop virtual entity to support all fintech investment in Singapore.
