After 2015’s record-setting global funding to fintech companies, 2016 experienced a decline in the market with an almost fifty percent slide in fintech investment.
According to KPMG International’s «The Pulse of Fintech» – a quarterly report on global fintech investment, the 2016 fintech funding total of $24.7 billion was still significant compared to pre-2015 investment levels.
After 2015’s record-setting $46.7 billion in total global funding to fintech companies, 2016 experienced a decline in the market with a 47.2 percent slide in fintech investment.
2017 A Fintech Shakeout Coming?
Many in the industry see the coming year as being the time when fintech's will have to start to deliver on revenue generation or move on.
While some financial technology firms are being integrated into mainstream consumer finance or working with or being acquired by major banks, others which claim to be game changing are nothing more than elaborate websites with hyperlinks.
«2017 is shaping up to be a pivotal year for fintech globally,» said Brian Hughes, Co-Leader, KPMG Enterprise Innovative Startups Network, and National Co-Lead Partner, KPMG Venture Capital Practice, KPMG in the U.S.
China The Leader?
Merger and acquisitions (M&A) and private equity (PE) fintech deals dropped considerably in 2016, while venture capital (VC) investment reached a new high of $13.6 billion compared to $12.7 billion in 2015.
China has become a fintech powerhouse, both in investment flow and deal activity with Alibaba through its subsidiaries pushing into the U.S. Europe and deeper into Asia. 2017 will likely see a bigger Chinese fintech influence.
Singapore Regulator Gets it
In Singapore, the overall investment in fintech companies saw a drop from $605 million to $214 million in 2016. Conversely, the number of deals only decreased by two to 28 in 2016, indicating an overall fall in average deal value.
«In 2016, we saw The Monetary Authority of Singapore (MAS) driving the evolution of Singapore into a prominent fintech hub, looking to 2017, I believe MAS will fast-track the proposals to simplify authorisation process for VC funds to address this and attract more VCs to Singapore,» said Chia Tek Yew, Head of Financial Services Advisory, KPMG in Singapore.
Outlook Strong For Insurtech
Insurtech is predicted to continue the strong growth witnessed in 2016 as the insurance industry plays catch-up with the innovations seen in the banking industry.
Growing applications of innovative technologies like wearables, the Internet of Things and artificial intelligence to the insurance industry are also likely to spur further investment.
