Investment pouring into Chinese fintechs

Accenture report shows total investment in Asia-Pacific hits US$10.5bn in the first nine months of 2016, compared with US$6bn in the United States

PUBLISHED : Wednesday, 09 November, 2016, 5:35pm
UPDATED : Wednesday, 09 November, 2016, 10:05pm

Investment in Chinese financial technology companies (fintech) pushed total investment in Asia-Pacific to US$10.5 billion in the first three quarters of 2016, dwarfing a total US$6 billion of similar investments in the United States, according to Accenture.

Massive investments into fintech companies in Asia-Pacific, including a US$4.5 billion round of private equity financing by Alibaba Group Holding affiliate Ant Financial Services in April, catapulted the region well ahead of Europe, which attracted US$2 billion in the same period, Accenture analysis of CBI Insights data found.

Alibaba Group owns the South China Morning Post.

The latest investment figures come as the eight participants of Accenture’s latest Fintech Innovation Lab Asia-Pacific batch demonstrated their technology to investors in Hong Kong on Wednesday.

“We are increasingly seeing a willingness from financial institutions in the region to work with fintech startups to help address new challenges ranging from how best to adopt blockchain technology to how to maximise IT efficiency,” said Jon Allaway, senior managing director, Financial Services at Accenture.

Ant Financial this week took the top spot in KPMG’s Fintech100 list alongside fellow Chinese companies micro loans company Qudian, peer-to-peer lender Lufax and internet insurance company Zhongan in the top five. A total of 24 companies represented the Asia-Pacific region on the list.

The Hong Kong government has introduced a series of measures to support fintech in the city, and banks including Standard Chartered and DBS run their own fintech accelerator programmes for start-ups.

Eight companies ranging from those developing fraud prevention tools, to wealth management solutions and know-your-customer (KYC) regulations, were selected for Accenture’s 12-week mentoring programme.

The programme is run by the company in collaboration with financial institutions, including Bank of America Merrill Lynch, BNP Paribas and Commonwealth Bank of Australia.

Dan Schleifer, co-founder of US-based financial chart data and visualisation company ChartIQ said the four-year-old firm joined the programme to gain exposure of financial institutions and expand its presence in Asia-Pacific. The company now plans to open a Hong Kong office as its headquarters for the region.

ChartIQ licenses its technology to financial institutions and other clients to allow them to access and visualise internal and external data streams in one place, instead of relying on multiple applications, Schleifer said.

“[Financial institutions] know they have tonnes of data, but it’s all in different places, in different formats and there’s no single way to access it.” Schleifer said.

“We provide easy tools to ... pull in that data, mash it up on the fly and allow the trader to analyse it using different tools.”

Edmund Lowell, founder of programme participant KYC-Chain, said his company is developing technology based on the blockchain – the distributed ledger system behind crypto currency bitcoin – to help financial institutions to verify customers’ identity.

Lowell claims the technology will reduce the cost and time needed to comply with KYC as well as acting as a step towards financial institutions acting as repositories for digital identities.