Fintech investment falls to six-year low in Asia-Pacific region
Fintech investment in the Asia-Pacific region plummeted to the lowest level since 2014: US$11.6 billion. COVID-19 drove a lot of investment away from emerging markets like Southeast Asia, particularly in the second half of the year.
Corporate investment grows year-over-year
One light in 2020 was corporate-affiliated investment, which fell only somewhat to US$7 billion year-over-year, in part due to corporates looking to accelerate their digital transformation efforts in the face of COVID-19.
Payments space proves most resilient
The payments space was the most resilient fintech sector in the Asia-Pacific region; during H2’20, Australia-based B2B payments company eNett was acquired by US-based WEX for US$577 million, Australia-based digital bank Judo Bank raised US$209 million, South Korea-based money transfer company Toss raised US$147 million, and India-based payments company Razorpay raised US$100 million.
Early stage companies continue to struggle, focus on conserving cash
Across much of the Asia-Pacific region, early stage companies continued to struggle to attract funding, causing many to enhance their focus on achieving profitability and on conserving cash.
Shift in investment from Southeast Asia into more established markets
Southeast Asia, which attracted significant fintech investment in recent quarters such as the $3 billion raise by platform company Gojek in H1’20, stalled in H2’20 as investors turned quickly to more developed markets and to proven companies with business models expected to outlast the pandemic.
Interest in IPO opportunities increases despite the cancellation of Ant Financial dual listing
While the Ant Financial dual-IPO was cancelled prior to listing, there is still strong interest among Asia-Pacific based fintech unicorns in IPOs given the successes and valuations achieved by unicorn companies recently.
What to watch for in 2021
- Growing participation by corporates looking to enhance their digital offerings
- Ecosystem platforms looking to provide financial services products as part of their offerings
- Increasing investments in banking-as-a-service models, insurtech and wealthtech
- Strengthening interest in ESG management platforms and solutions from a regtech perspective