A report released by Accenture shows that Fintech investments in Asia-Pacific have rapidly increased in 2015 with investments increasing from nearly $880 million in 2014 to about $3.5 billion in the first three-quarter of 2015. The biggest investments were made in payments (40 percent) and lending (25 percent).
Jon Allaway, senior managing director of Financial Services at Accenture said that two trends are emerging. The first is the fact that venture capitalists are already seeing the potential growth of Fintech. The second is that financial services firms are taking advantage of the various opportunities being created by the Fintech industry. Most of these companies are remodeling their business operations using cloud technology, blockchain, and mobile wallets.
The Accenture report showed that the number of investment deals is also expected to increase further. It stood at 122 as of October 1, compared with 117 for the whole of 2014. On the whole, the value of deals has significantly increased. Some large investments have come from big companies in China such as Alibaba. Other big non-traditional financial services firms have also continued to invest in Fintech payments over the past years, an indicator that they may decide to offer Fintech services if existing companies fail to provide high-quality services.
Financial services companies are also turning to Fintech to streamline their operations so as to comply with new regulations and currencies. As a result, most banks, startups, and investors are likely to focus on blockchain technology. This will facilitate cooperation among banks, clearing houses and credit card companies in creating faster and more efficient accounting services. It will also optimize utilization of capital by reducing transaction latency and counterparty risk.
Cloud is another Fintech opportunity that is likely to be utilized heavily in the upcoming future, with Fintech startups expected to develop new cloud products and services. Banks are starting to look for data that can be stored in public cloud and private cloud for the safety and privacy of customers. Users will also gain the benefits of cloud such as flexibility, efficiency, lower costs and its on-demand capabilities.
Several cases of data breaches worldwide have been reported in the media creating an opportunity for more investments in cyber security. Fintech startups are expected to develop systems that will increase cyber security, thus reducing the risk of data breaches.
Fintech innovations remain very widely accessible by continuously presenting numerous investment opportunities. Fintech companies need to identify potential problem areas by finding out what the banks need and subsequently develop relevant solutions.