Fourfold increase

Asia-Pacific Investments in Fintech Boom

Many market participants are starting to pay more attention to the opportunities offered by advancements in fintech.

Investments in financial technology in the Asia-Pacific region have grown fourfold in the first nine months of 2015 compared to the whole of 2014, according to a report by the global consultancy Accenture. Payments technology accounted for 40 per cent of the total, while 25 per cent were dedicated to lending.

In money terms, the volume of the Asia-Pacific fintech market for January-September 2015 stood at almost $3.5 billion, up from a relatively modest $880 million for the whole of 2014. In terms of deals, the 2015 number as of October 1 was 122, up from 117 for the whole of last year.

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China leads increase

The increase in deal numbers is small, compared to the money value. The increase in the latter was attributed mainly to higher investments from and to China, Accenture said in a press release. This increase was spearheaded by online retail giant Alibaba, which invested heavily in its mobile payments platform for India Paytm. The other major contributor to the increase was Ping An Insurance Group, which poured substantial funds into its multiple alternative financing and investment platform development venture Lufax.

“Financial services companies are waking up to the vast opportunities created by the current wave of fintech.”

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Commenting on the report, Accenture’s senior managing director for the ASEAN Financial Services group Jon Allaway said, “We are seeing the convergence of two trends: venture capitalists are clearly signaling fintech is a growth opportunity and simultaneously financial services companies are waking up to the vast opportunities created by the current wave of fintech. Financial services institutions are embracing cloud technology, mobile wallets and blockchain to fundamentally redefine their business and operational models. We are seeing this in the increased investments from banks in fintech venture capital funding, incubators and startups.”

Security and compliance underpin attractiveness for banks

Besides payment platforms, the Accenture report revealed that many financial service providers operating in the Asia-Pacific region are turning their attention to fintech in order to better comply with new regulations – just like their counterparts in Europe and North America – and to increase the efficiency of their business. Related to this is a projection for growing investments in cybersecurity, especially following the recent series of security breaches in online trading services providers. One of these was none other than FXCM, one of the largest global online forex brokers that in October announced that there had been unauthorized withdrawals from client accounts. Also last month Finance Magnates reported that security is fast becoming a top priority for liquidity providers.

Interest in blockchain and cloud on the rise

The other two trends for the Asia-Pacific fintech investment sector are blockchain and cloud technology, according to the Accenture report. The consultancy projected that increasing numbers of startups, banks and individual investors in the industry will become interested in investing in cryptocurrencies and related assets. For lenders and clearing houses in particular, the ledger technology has the added advantage of allowing for counterparty risk reduction, shorter transaction latency, and consequently optimal use of capital.

As for cloud, Accenture notes that its adoption is moving forward at high speed and this speed is causing banks to start considering how they can benefit from it. One major benefit is regulatory compliance (yet again), which can be aided by the storage of data in a secure private cloud, with the bank using this service safe in the knowledge that it’s not just storing secure data but also that it’s doing so at a lower cost – a major concern for lenders across the world.

 

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