Global investment in financial technology (fintech) ventures grew 10 percent in 2016, to $23.2 billion, driven primarily by blockbuster deals in China, according to Accenture.
Fintech financing in Asia-Pacific in 2016 eclipsed that of North America for the first time, more than doubling, to $11.2 billion from $5.2 billion in 2015. North America attracted $9.2 billion in financing in 2016, and Europe attracted $2.4 billion.
The number of fintech deals rose sharply in all major geographies, to nearly 1,800 from approximately 1,200 in 2015. However, the growth in total value of investments was due mainly to China and Hong Kong, where just 3 percent of the deals accounted for nearly 43 percent of total fintech investment globally.
“Over the last five years, global fintech financing activity has grown by 56 percent per annum,” said Richard Lumb, group chief executive – Financial Services at Accenture.
“For many years Silicon Valley, New York and London were the dominant centers of innovation and demand, but now fintech has spread like wildfire around the world, and Asia-Pacific has become the rising star.”
Lumb also notes that the swing of investment from west to east is largely driven by the greater opportunity for new entrants to use fintech to define the new fabric of the industry than in the west. As a result, global competition among fintech ventures has never been greater, and financial institutions that are equipped to tap these ventures for innovation are better positioned than ever.
China dominated 2016 investment
China and Hong Kong alone accounted for $10.2 billion, or 91 percent, of Asia-Pacific’s $11.2 billion in fintech investments in 2016, due to several blockbuster deals. In fact, all of the 10 largest fintech investments in Asia-Pacific last year were in China and Hong Kong; together those 10 deals accounted for 82 percent of all Asia-Pacific investment in 2016.
Leading the deals was Ant Financial Services Group – the financial-services affiliate of e-commerce giant Alibaba Group Holding that operates China’s online-payments platform Alipay – which closed a $4.5 billion fundraising round in April.
Ping An-backed Lufax, which has started using the name Lu.com, completed a $1.2 billion round of fundraising in January. In that same month, China’s second largest e-commerce company, JD.com, raised $1 billion in new funding for its consumer finance subsidiary, JD Finance.
North America and Europe
While the number of fintech deals rose strongly in North America and Europe in 2016, the amount of overall investment declined. According to tracking data from CB Insights, the number of fintech deals outside Asia-Pacific in 2016 increased 48 percent, but the reported amount of dollars invested fell 24 percent.
The U.K.’s decision to exit the European Union added to political uncertainty in key fintech markets, and the prospects for regulatory change in the financial sector were particularly pronounced during the 2016 U.S. election cycle.