Asia-Pacific Recorded US$27.5 Billion Fintech Investment in 2021, Market Remains Vibrant amid Regulatory Activities, says KPMG

KPMG’s Pulse of Fintech H2’21 highlights that fintech investment in the Asia-Pacific region reached US$27.5 billion in 2021 across a record 1,165...

KPMG’s Pulse of Fintech H2’21 highlights that fintech investment in the Asia-Pacific...

2 March 2022, Hong Kong — KPMG’s Pulse of Fintech H2’21 highlights that fintech investment in the Asia-Pacific region reached US$27.5 billion in 2021 across a record 1,165 deals. While total investment fell well shy of 2019’s peak, it was almost twice the US$14.7 billion seen in 2020.

The Asia-Pacific fintech investment market remains vibrant amid the regulatory activities in China. In 2021, China continued to step up regulations in the fintech space, most notably through banning cryptocurrency transactions, bitcoin mining, and the facilitation of cryptocurrency trading. While the uptick in regulatory activity in China led some fintech investors to pull-back from China, it also raised the profile of other fintech hubs in the region — including India and Singapore. Among the top 10 deals in the region this year, China’s MediTrust Health ranked 9th with US$308 million raised, while deals in Japan, South Korea, India and Singapore accounted for the others.

During 2021, interest in embedded finance propositions grew in the Asia-Pacific region, particularly Southeast Asia where banks are increasingly looking for assistance to improve their embedded finance, digital wallet, and supply chain finance capabilities. Interest in BaaS solutions was also on the rise during the year with numerous banks and startups across the region focused on the issue, whether as service providers, partners, or potential clients.

During 2021, the Buy-now-pay-later (BNPL) space in the Asia-Pacific region remains hot, partly driven by PayPal’s acquisition of Paidy for US$2.7 billion in H2’21.

Andrew Huang, Partner and Fintech Leader, KPMG China, says:

In January 2022 the People's Bank of China issued the Fintech Development Plan for 2022-2025, which states its fintech development principles for the upcoming four years as ‘digitally driven’, ‘wisdom for the people’, ‘green and low carbon’ and ‘fairness and inclusion’. The plan underlines the country’s strong emphasis of fintech development on technology, digital transformation, data security and support to the real economy. Looking at the investment and financial markets, technologically-advanced fintech enterprises that offer solutions on data security, green finance and tackling the financial difficulties of small and medium sized firms are expected to attract increased attention.

Entering 2022, the optimism for fintech investment globally is very strong, with different subsectors well-positioned to keep evolving and new ones expected to emerge and flourish.

Barnaby Robson, Partner, Deal Advisory, KPMG China, says:

Investment in the crypto and blockchain space soared in 2021, rising from $5.4 billion in 2020 to over $30 billion. Globally, there was an incredible increase in the level of recognition for the potential role of crypto and its underlying technologies in modern financial systems. Bull case factors supporting an Asia (ex mainland China) continuation of this trend include: increased retail and institutional adoption, rising use-case and the attractiveness of financial assets with capped supply in an inflationary environment.

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