Investments in non-bank fintech companies across Asia-Pacific has quadrupled over the past year – from about $880 million in all of 2014 to nearly $3.5 billion in just the first nine months of 2015, according to a new report by Accenture
Accenture says the figures are a wake-up call to the local banking community, as large e-commerce conglomerates such as Alibaba flex their financial muscles and push further into traditional financial strongholds. According to the report, the largest share of 2015 Asia-Pacific fintech investment deals were in payments (40%) and lending (25%), which have traditionally been the sole domain of banks.
While the volume of deals over the current year is only slight up on 2014, the value has skyrocketed, due to larger investments in and from China. They include investments from Alibaba and its Ant Financial Services Group subsidiary into Paytm, a mobile payment and commerce platform in India, as well as fundraising efforts by Ping An Insurance Group venture Lufax, which has been developing multiple alternative financing and investment platforms, including peer-to-peer and business-to-customer platforms.
“Major non-traditional financial services companies have been investing in fintech payments in China for the past year,” says Beat Monnerat, senior managing director at Accenture and the company’s financial services lead in Asia-Pacific. “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.”
The banks are not entirely resting on their laurels, increasing investments in venture capital funding, incubators and startups and driving through innovations via cloud technology, mobile wallets and blockchain experiments.
The release of the report coincides with the second annual investor day for startups who have graduated from Accenture's FinTech Innovation Lab Asia-Pacific, which seeks to further bridge the gap by parading some of the region's most promising startups before an audience of VCs and local banks.
“Identifying potential areas for more fintech innovation is a key function of our fintech labs,” says Jon Allaway, senior managing director of Accenture’s financial services group in Asean. “For startups, the opportunity is unparalleled: they get to hear from 12 different banks on what those banks need; for the banks, the mentoring helps them identify solutions that are coming to the market soon that may be able to help them serve their customers better.”