Fintech is an incredibly hot area right now and that’s not expected to change anytime soon due to the abundance of investor dry powder and Covid-related digital acceleration efforts.
That’s according to a recent report from KPMG which said investment globally for the first half of the year hit $136 billion across 2,456 deals. Moreover, the outlook for the full year should far outpace last year’s annual total of $168 billion across 3,520 deals.
Australian fintech saw a strong start to the year, with $1.23 billion million invested in the first half including National Australia Bank’s $236 million acquisition of digital bank 86 400 and $104 million venture capital raises by Airwallex and Brighte.
“Locally in Australia, we are already seeing that the second will likely match, if not exceed, the expectation for global activity, with already-announced corporate deals including the Square’s proposed acquisition of Afterpay, Latitude acquiring Symple Loans, and Bendigo Bank acquiring Ferocia to consolidate their ownership with the digital banking app, Up, as well as a raft of venture style investment continuing to buoy the market,” said Ian Pollari KPMG's local head of banking and co-leader of the advisor’s fintech practice.
Pollari said the deal - which is one of the largest fintech deals ever recorded - marks the emergence of Australia’s fintech sector as globally significant.
In addition to Open Banking, digital banking, payments, and B2B services, Australia saw rising interest in digital mortgages with Athena Home Loans raising $124 million.
Blockchain and cryptocurrency firms were also hot focus areas for investment in the first half. They saw an explosion of investment activity on the back of increased consumer and corporate demand for associated products and services, the report found.
“Investment in blockchain and cryptocurrency-related businesses heated up dramatically in the first half, with investment more than twice the level seen in 2020 and soaring past the previous annual record high set in 2018, “Pollari added.
“We also saw a maturing in the blockchain and cryptocurrency sector in terms of investors, resulting in significant amounts of institutional money being invested in the space.”
Reaping the benefits
Australia is starting to reap the benefits of early investment in establishing a fintech eco-system, he continued. “Interest in banking-as-a-service solutions continued to grow, with the first half of the year seeing Westpac moving forward with its development of a BaaS model in partnership with UK-based fintech 10x, announcing a partnership with regtech FrankieOne to facilitate seamless onboarding.
Other deals include Commonwealth Bank pumping $20 million in Amber Energy as part of a partnership to provide access to wholesale energy process to its customers, as well as investing in More Telecom and Tangerine to offer telecommunications and internet services to CBA mortgage customers.