Fintech investment in the Asia-Pacific region rose slightly in volume from US$50.2 billion across 1,604 deals in 2021 to US$50.5 billion across 1,227 deals in 2022, touching a new record high, according to a recent report. However, there were no M&A deals worth more than US$1 billion during the second half of 2022.
In Asia-Pacific, wealth management geared at lower wealth segments also gained some attention, providing unique investment opportunities to individuals not currently targeted by traditional wealth management companies, finds accounting firm KPMG’s Pulse of Fintech report. Both investors and fintechs are also focusing more on the development and growth of business-to-business (B2B) fintech offerings, and the payments sector is continuing to attract the largest deals in the region.
The fintech environment has led several fintechs in China to look globally for growth opportunities, the report notes. In 2022, for example, Ant Group launched Alipay+ Unified Payment – a cross-border digital payments app that allows consumers to pay for goods at specific retailers in different countries (for example, South Korea, Malaysia and the Philippines) using their local currency digital wallet.
“In China, we are seeing more partnerships between fintechs and traditional banking players that are focused on enabling the traditional players to expand the services they offer to new customer segments, such as low-income earners and small businesses,” says Andrew Huang, partner, head of fintech, KPMG China. “These partnerships will be essential to help banks do more inclusive finance – which is a key priority heading into 2023.”
In the inclusive finance space, fintechs in China have partnered with big banks to provide the technology to allow them to better assess risks related to small and medium-sized enterprise loans or loans to low-income individuals.
“The growth of digital banking, digital payments and crypto in different jurisdictions over the last few years has driven significant investment in regtech [regulatory technology] aimed at ensuring that such transactions are accurate, transparent, reliable and compliant,” adds Barnaby Robson, partner, deal advisory, KPMG China. “Recently, investors have shown very strong interest in companies able to provide multi-dimensional services.”
Looking ahead to the second half of 2023, jurisdictions in Asia-Pacific, such as Hong Kong, Japan and Singapore, that already have strong crypto regulatory environments are attracting interest from crypto players and investors in the wake of the meltdown of FTX.
Another trend to watch during the first half of 2023, the report notes, will be whether the post-listing performance of 360 DigiTech, following its secondary listing in Hong Kong, helps improve prospects for fintech exits in the region.
