Fintech investment in Australia had a massive 2019, with nearly AU$3 billion being ploughed into the sector according to the latest analysis by consultancy giant KPMG.
The biannual Pulse of Fintech report for the second half of 2019 looks at global and regional fintech investment trends, and while global fintech investment fell to US$135.7 billion, in 2019, across 2,693 deals, down $5.3 billion from 2018’s record US$141bn, the Australian figure skyrocked from US$753.18 million in 2018 to US$1.913bn (AU$2.9bn) in 2019.
Two key deals drove the Australian figure – CBA’s US$1.2bn acquisition of Property Exchange (PEXA) and the US$280 investment in neobank Judo. Fellow neobank Athena’s US$43.4m Series C round, Grow Super’s US$11.8m Series B and Cover Genius’ US$10m Series C were also notable investments.
KPMG Head of Fintech, Australia, Dan Teper, labelled 2019 “a break-out year” for local fintech.
“There is a depth of innovation across multiple areas of fintechs, including banking and lending, proptech, insurtech and superannuation – and this is increasingly being recognised by investors and corporates,” he said.
“As we move forward, we would hope to building on the momentum of 2019, in particular as Australia further develops our digital banking regime and open banking regulations.”
Globally, the key niche sectors in 2019 were proptech and fintech-focused cybersecurity, with blockchain and crypto declining.
The number of fintech deals by global tech giants – including Alibaba Group, Alphabet, Apple, Baidu, IBM, Microsoft and Tencent – increased for the fifth straight year, with US$3.5bn invested across 46 deals in 2019.
Fintech investment in the Americas remained strong and steady at US$64.2 in 2019, down $1.3bn on the previous year. Europe soared, up from US$43.4bn in 2018 to US$58.1bn last year. Asia performed strongly , thanks in part to the PEXA deal and the US$1.7 bil Series G raise by India’s Paytm.
KPMG predicts that in 2020, with lines between financial services and non-financial services will continue to blur as tech giants such as Alibaba, Tencent and Google continue to seek ways to integrate financial services within their ecosystem to offer customers.
Integration will be a big priority and the unbundling of financial services that has occurred over the past few years will likely start to reverse as fintechs, traditional financial institutions, and big techs look to provide more value and more seamless experiences to their customers, according to KPMG International’s global co-leader of Fintech, Ian Pollari.
“2020 is going to be an exciting and pivotal year for fintech, particularly as we start to see the impact of the digital banking licensees in Australia, Hong Kong (SAR), and Singapore launching and endeavouring to scale, as well as other markets following suit,” he said .
“In addition, a number of companies from outside of financial services are working to get into parts of the financial services value chain – either directly or through partnerships – and they’re going to blur the lines of financial services even more.
“As a result, we expect to see bolder responses from incumbent financial institutions in terms of partnerships, as well as strategic investments and M&A.”