Investment in Australia’s emerging fintechs increased in 2016 while the rest of the world slumped.
Analysis by KPMG shows a 47.2% slide in fintech investment globally to $US24.7 billion
But in Australia the total fintech investment was $US656 million across 25 deals in 2016, a major increase on 2015 with $185 million across 23 deals.
Venture capital investment in fintech also stayed at healthy levels, with $US71 million to 15 deals. This was a considerable drop on 2015’s $US175 million total but similar to 2014 when $US88 million was recorded against 17 deals.
According to KPMG International’s The Pulse of Fintech, a report on global fintech investment, the global drop was mainly due to reduced merger and acquisitions and private equity deals.
Venture capital investment, however, reached a new high of $US13.6 billion compared to US$12.7 billion in 2015.
Australia fintech sector has grown from a low base of $51 million of investment in 2012 to exceed $600 million in 2016.
“Similar to what we have seen globally in 2016, Australia’s performance was driven by some large deals, and specifically M&A and private equity transactions,” says Ian Pollari, global co-leader of fintech and Head of Banking at KPMG Australia.
“Venture capital activity, while down nominally on last year’s figure, remains reasonably strong.
“While mega deals result in peaks and troughs in overall figures, the trend is clear and demonstrates increasing interest and investment activity in fintech.”
KMPG is forecasting strong growth for insurtech as the insurance industry plays catch-up with the innovations seen in the banking industry.
“Growing applications of innovative technologies like wearables, the Internet of Things and artificial intelligence to the insurance industry are also likely to spur further investment,” says Pollari.
“There is also likely to be increasing participation of tech giants in the fintech sector. Already companies like China-based Alibaba Group are targeting promising fintech companies to expand globally (such as the MoneyGram acquisition announced last month) as well as creating more partnerships with established financial institutions in international locations to gain access to customers and knowledge of local markets.”