Analysis from KPMG showed that investment in Australia’s emerging fintech start-ups had increased in 2016, despite a global side of 47.2 per cent.
According to the KPMG International The Pulse of Fintech report on global trends across financial technology, investment across the United States, Europe and Asia is waning, while Australia is surging ahead recording record investment levels internationally in 2016.
The global drop in investment and funding was primarily attributed to reduced merger and acquisitions (M&A) and private equity (PE) fintech deals, according to the report. In Australia fintech investment across 25 deals last year equated to $656m, an increase on the $185m total in 2015.
Large funding rounds from Tyro and Prospera had made noteable boosts to sector revenue in 2016, as well as the CHAMP Private Equity acquisition of Pepperstone last May, and Stirling Product’s November 2015 acquisition of Mx360Group.
“Australia’s performance was driven by some large deals, and specifically M&A and private equity transactions,” said KPMG co-leader of fintech and head of banking (Australia), Ian Pollari.
“In just five years, Australia has seen the creation of a healthy and active fintech sector, from an extremely low base of just $51 million of fintech investment in 2012 to exceed $600m.”
Pollari said the findings indicated the increased interest in the sector locally, as well as burgeoning interest in fintech investment specifically and in new and emerging technologies, including blockchain. Global venture investment in bitcoin and other blockchain technologies reached $709.8 million in 2016, up from $575.8 million in 2015.
“2017 is shaping up to be a pivotal year for fintech globally, with the momentum seen in areas such as Insurtech and blockchain translating into larger investments and funding rounds as they prove their commercial viability,” Pollari said.
“This will be positive for the sustainability of the market, with 2017 likely to see more transaction activity from corporate VCs and strategic investors seeking to capitalise on opportunities at more realistic valuations.”