A report compiled by Accenture shows that investments in fintech across Asia-Pacific grew significantly in 2015 — from about $880 million in 2014 to nearly $3.5 billion in just the first nine months of 2015.
In this year, the largest share of Asia-Pacific fintech investment deals were in payments[40%] and lending[25%].
“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,” says Jon Allaway, Senior Managing Director, Accenture’s Financial Services group in ASEAN.
Financial services institutions are largely turning to cloud technology, mobile wallets and blockchain to redefine their business and operational models. This is evident from the increased investments from banks in fintech venture capital funding, incubators and startups, added Allaway.
According to the report, the volume of deals is set to increase slightly—at 122 as of October 1, compared with 117 for all of 2014—but the value of deals has increased substantially due to larger investments in and from China.
They include investments from Alibaba Group Holding and its Ant Financial Services Group subsidiary into Paytm as well as fundraising efforts by Insurance Group venture Lufax.
According to Beat Monnerat, Senior Managing Director, Accenture, Major non-traditional financial services companies have been investing in fintech payments in China for the past year.
“The increasing deal size should serve as a wake-up call to financial services companies in China and across Asia-Pacific that if they do not offer truly useful, customer-friendly digital solutions, competitors will step into the breach not just on the retail front but also in commercial transactions,” added Monnerat.
Banks Should Focus On Developing in Blockchain, Cloud and Cybersecurity
Accenture forecasts that the underlying distributed ledger technology that supports the exchange of crypto currency and cryptographically secured financial assets, will increasingly be a focus for startups, banks and investors.
Blockchain could help banks, credit card companies and clearinghouses to create a better accounting flow with an optimized capital use by reducing counterparty risk and transaction latency, says the report.
As cloud technologies are gaining momentum, banks can now ensure regulations are met by keeping sensitive customer data securely in a private cloud, while still taking advantage of it benefits. This creates opportunities for fintech startups to develop new services tailored around the cloud, points out the report.
Accenture also expects investment in cyber security to increase significantly in the coming year, the report added.