Fintech investment in Asia Pacific got off to a modest start in 2019 after experiencing a record-shattering level of investment in 2018. Both VC investment and M&A activity in Asia Pacific came down significantly during the first half of the year. A lack of megadeals in China accounted for the majority of the decline — with investors holding back given both the US-China trade tensions and the increasing regulatory focus being given to fintech and fintech companies by Beijing.
In China, blockchain is expected to gain more attention from fintech investors, particularly blockchain related to microfinancing. AI, big data and cloud services are also expected to remain attractive. Regtech is also poised to see growing investment given the strong focus being given to it by the central government and provincial government authorities.
Hong Kong (SAR), China, will be one jurisdiction to watch as the companies issued virtual banking licenses move forward. Their experience, if successful, could help spur additional investment – both from non-traditional players and from traditional banks.
Following in Hong Kong (SAR), China’s footsteps, the Monetary Authority of Singapore (MAS) announced plans in H1’19 to issue up to five virtual banking licenses to Singapore-headquartered companies. The MAS licenses may be particularly disruptive as they are expected to be granted to companies focusing on responding to the needs of underserved market segments and to non-banking entities in other sectors such as telecom and ride-hailing. Already, several large tech companies have shown interest in the MAS licenses, including Grab and Razer. These licenses are expected to spur ongoing interest in challenger banking in the region.