China dominates global fintech investment in 2016

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The Asia-Pacific region has seen a vast amount of money invested in its companies this year, according to the latest figures from Accenture.

According to the professional services company, as of July 31 2016, $9.62 billion has been invested in the region, with the bulk of the money being pumped into Chinese ventures. The figure is more than double the amount invested last year ($4.26 billion).

The APAC investment is actually more than money invested in North America, which only managed $4.58 billion, and most certainly more than Europe ($1.85 billion) in the same period.

However, the number of deals made in North America and Europe still remains higher, suggesting that investment in the APAC region targets a select few fintech companies. There have been 509 North American deals, 230 deals in Europe but only 192 deals in the Asia-Pacific region.

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Beat Monnerat, Accenture senior managing director, Financial Services Asia-Pacific, said that it is China’s established companies as opposed to its early-stage companies that are leading the fintech charge.

“Fintech companies with major backers such as Alibaba and JD.com are focussed on providing positive end-to-end customer experiences, which includes payments and lending. This is transforming China’s financial services industry and is consistent with the global ‘Fourth Industrial Revolution’, which is bringing innovation from non-traditional competitors to the financial services industry.”

Earlier in the year, Ant Financial, the financial services-affiliate of Alibaba and the company that runs Alipay, closed a private fundraising round worth $4.5 billion. This meant the company was now valued at $60 billion, just $2 billion shy of Uber, the biggest privately owned tech company in the world.

In January alone Lufax (now Lu.com) and JD.com, China’s second-largest e-commerce company, both closed funding rounds worth $1.2 and $1 billion respectively.

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Alibaba has also been making big investments in India’s Paytm, most recently last September when it invested approximately $680m to end up owning a total 40% of the company says it has over 100 million users.

“The fintech trend in China continues to skew toward online payments and lending, including peer-to-peer (P2P), which is creating market-share dilution for banks,” said Albert Chan, managing director financial services China, Accenture. “China’s banks, whether building their own competitive platforms or not, should consider investing in collaborative fintech ventures in order to remain competitive.”

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