“Strongest year ever” for fintech investments

1 August 2018

Investment in Australia’s fintech sector has followed the upwards tick of global growth patterns in the first half of 2018, up to US$63.7 million from US$56.1 million in the second half of 2017, according to KPMG’s Pulse of Fintech report.

While numbers have hit a record high, the report noted much of the investment in Australia was concentrated across a small number of deals, with just seven deals during H1 of 2018 down from 12 in H2 of 2017.

Astrid Raetze, partner and head of Australian fintech at KPMG, said significant outliers still dominated the Australian fintech ecosystem and propelled most of this growth.

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“... Most recently, the acquisition of financial data analytics provider Hometrack Australia for roughly US$97 million by REA Group,” she said.

The report said the surge in fintech funding was driven in part by two large deals: the US$14 billion raised by Ant Financial in the second quarter of this year and Vantiv’s acquisition of WorldPay for US$12.9 billion in the first quarter.

KPMG noted the strength of the Asian region was a significant investment trend, with India, Australia and Singapore all recording quarter-over-quarter increases, and total fintech funding in Asia surging to US$16 billion across 162 deals in the first half of this year.

The regtech sector has seen investments upwards of US$1.37 billion, spurred by the introduction of the General Data Protection Regulation in the EU, while open banking would likely continue to buoy investments over the second half of 2018 and into the following year.

Ian Pollari, KPMG Australia’s head of banking and global co-lead for fintech, said the outlook for fintech remained positive.

“With a significant amount of capital waiting to be deployed, a growing diversity of fintech hubs across the globe, and more corporates looking to seize on larger M&A opportunities, investment in fintech is expected to remain strong heading into the second half of 2018,” he said.

Pollari said not only would investments in individual technologies like artificial intelligence and emerging subsectors like regtech take off, but efforts to combine fintech capabilities would be a significant upcoming trend.

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