APAC Fintech Investment More Than Doubles

DigitalCFO Newsroom | 9 September 2022

Total investment in Asia-Pacific region’s fintech sector more than doubled to a record USD41.8 billion.

Total investment in Asia-Pacific region’s fintech sector more than doubled to a record USD41.8 billion during the first half of 2022 from USD19.2 billion recorded in second half of 2021, according to the latest edition of KPMG’s Pulse of Fintech. In many parts of the region, particularly outside of China, the aged infrastructure underpinning existing financial markets is driving a significant amount of investment towards the innovation of financial market infrastructure and to the digital last mile of transactions, finds the 2022 1H edition of the Pulse of Fintech.

Andrew Huang, Partner and Fintech Leader, KPMG China says: “Looking into 2022 2H, regulators in the region are continuing to focus on making industry changes to support open banking and decentralized finance in an orderly and safe way. Investors are taking a more focused approach to their investments, prioritizing investments in companies with very strong business models and distinctive value propositions. Growing focus on B2B solutions and tech enablement of traditional players is expected, rather than standalone fintech plays, particularly in China.”

In China, digital transformation continues to be a significant government priority. During 2022 1H, The People’s Bank of China released its Fintech Development Plan (2022-2025), which stressed its commitment to appropriate regulation, privacy and data protection, low carbon and green fintech, and fair and inclusive financial services.

Fintech investment in China remained limited during 2022 1H. The largest fintech deal in the country in the first six months of this year was US$140 million raised by corporate expense management company Fenbeitong. Interest in the sector was also tempered as many companies focused on infrastructure plays and partnerships with traditional financial institutions. Insurtechs, however, continued to draw interests.

Barnaby Robson, Partner, Deal Advisory, KPMG China, says: “There were a couple of very big corporate M&A deals in the Asia-Pacific region during the first half of 2022, including Block’s mega-acquisition of Afterpay and the merger of Superhero and Swiftx. Given the increasing pressure on valuations, we could see more M&A activity in 2022 2H as corporates look for good opportunities to buy out their competitors in less mature markets and startups look to consolidate in order to gain market share and improve their profitability.”

While investment in areas that saw significant interest during the height of the COVID-19 pandemic have lost some attractiveness, areas that align with rapidly evolving global issues – including rising inflation, increasing interest rates, geopolitical uncertainty, and supply chain woes – have continued to see investment.

Key areas that garnered attention from investors in the Asia-Pacific region during 2022 1H included supply chain management, cybersecurity and privacy, identity management, and governance and compliance. Open data also saw solid investment during H1’22.

In the Asia-Pacific region, the massive interest and hype seen during the past 12 to 24 months over companies operating in a few fintech subsectors, such as retail payments, insurtech, and B2C solutions, dissipated considerably during 2022 1H.