Total fintech funding in Asia drops to US$492m in Q1

Only US$406m in venture capital funding was raised in Asia.

Global fintech investment got off to a soft start in Q1’17, with the total invested globally at US$3.2 billion, down from US$4.15 billion in Q4’16 according to the Q1’17 edition of The Pulse of Fintech – KPMG International’s quarterly report on fintech investment.

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Fintech M&A dropped in Q1’17, with US$920 million in deal volume – down from US$1.8 billion in the previous quarter, and less than half of the US$4 billion in funding in Q1’16. Venture capital funding to fintechs held relatively steady at US$2.3 billion in Q1’17 – a solid result although well below peak highs.

Asia fell to the back of the pack, with just US$406 million in venture capital funding raised. Asia’s lacklustre results reflected a lack of megadeals of previous quarters in the region.

Total fintech funding in Asia dropped in Q1’17 to US$492 million invested across 33 deals, reflecting a major drop off of investment in China in addition to a dearth of US$100m+ megarounds. Venture capital funding dropped from US$690 million in Q4’16 to just US$406 million in Q1’17. Corporates remained more resilient, with participation in Asia-based fintech deals climbing to over 30 percent.

Fintech sector gaining traction in Singapore

Q1’17 was a slow quarter for fintech investment in Singapore, with a total of 4 deals at US$14.3 million. Although marked considerably by outliers, the Singapore fintech scene still enjoys hefty comparative advantages within the region as a whole, ranging from regulatory aspects to geographic positioning and talent access.

“The MAS is aggressively promoting and marketing Singapore as a fintech hub for the Asia market – working with startups and global corporates to develop and fund fintech activities, and with numerous international regulators to bridge regulatory barriers. It’s quite evident that the MAS wants Singapore to be a no-brainer location decision,” said Mr Chia Tek Yew, Head of Financial Services Advisory, KPMG in Singapore.

Over the next few quarters, AI is expected to gain traction in Singapore, particularly on the digital labour front due to the country’s small size. Machine learning, compliance, financial inclusion and robo-advisory are also expected to attract more attention.