In Focus
MARKETS & INVESTING | Staff Reporter, Hong Kong

Fintech investments crashed 65.6% to US$188m in 2018

However, the number of deals picked up 27% as deals diversified.

Fintech investments in 2018 plummeted 65.6% YoY with startups raising US$188m compared with 2017’s US$546m, according to Accenture’s global fintech investment analysis. However, the number of deals went up 27% from 15 to 19 in 2018.

“The number of deals picked up considerably, which is a sign of a maturing market because it shows investors are more comfortable in looking at different fintech segments and diversifying the types of startups they invest, not just betting solely on big, established technology players in later rounds,” Ravinder Chhabra, managing director at Accenture who leads the Financial Services practice in Hong Kong, said in a statement.

Globally, fintech ventures more than doubled in 2018 to US$55.3b, led by a surge in funding in China and strong gains in several other markets as investors placed larger bets in more mature startups. China accounted for 46%of all fintech investments in 2018, with more than half coming from the record US$14b funding round in May of online payment provider Ant Financial.

In Hong Kong, financial services and technology startup Oriente raised US$105m in an initial funding round in November 2018 which it said it would use to level up its technology and product development, as well as fuel its growth into new Southeast Asian markets.

Similarly, fintech lending platform WeLab is gunning to be amongst the first batch of companies to apply for a virtual banking license from Hong Kong’s central bank, after it snagged US$220m in its Series B funding round in 2017.

Also read: Central bank paves way for fintech application in lending

In 2017, various Hong Kong regulators unveiled new measures that helped to lay the groundwork for further development of the city’s fintech ecosystem in 2018 and Hong Kong’s appeal as a global fintech hub and investment magnet, Accenture noted.

A report by KPMG highlighted how the Hong Kong Monetary Authority (HKMA) introduced an initiative in 2017 that would allow the use of Open Application Programming Interfaces (APIs) in banking with the goal of promoting collaboration between banks and fintech firms. Meanwhile, a proposal to link the respective sandboxes of the HKMA, the Securities and Futures Commission and the Insurance Authority to create a single entry point for piloting trials of fintech products is reportedly in the pipeline.

Also read: Hong Kong poise for insurtech growth in 2018

“It was a bit of a wait and see period last year to monitor the implication of some of these regulations and new initiatives,” Chhabra added. “With the new faster payments system in place, the first digital insurer unveiled and new virtual banking licenses about to be announced, the expectations are for 2019 to be another exciting and breakthrough year for fintechs in Hong Kong.”

Chhabra highlighted that given how quickly both digital insurers and virtual banks move once they are granted their licenses, there should be a considerable amount of activity in those two areas after a breakthrough year for insurtechs in 2018 in Hong Kong.

A separate report by recruitment agency Hays estimated 3,107 vacancies to be filled going into 2019 as Hong Kong’s insurance industry faces a dire shortage of manpower due to the lack of fresh graduates and new entrants into the industry.

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