GURUGRAM, India, March 8, 2022 /PRNewswire/ -- Looming
interest rate hikes could toughen the venture capital environment,
but fintechs with strong market positions will likely have no
trouble attracting investors, according to the 2022 Asia Pacific
(APAC) Fintech Market Report from S&P Global Market
Intelligence.
The newly released report spotlights key trends in fintech
investments, digital payments, and market dynamics between
technology players and banks in the APAC region.
"The pandemic has strengthened the case for fintechs, and we
believe that venture capitalists are likely to remain invested even
as a market pullback clouds the outlook for IPO or blank-check
exits," says Celeste Goh, Fintech
Research Analyst at S&P Global Market Intelligence. "The
uncertain market conditions ahead, however, may nudge investors
toward mature fintechs that have demonstrated financial discipline
and B2B companies, which tend to have better unit economics than
their consumer-facing counterparts. As established fintechs have
exhibited a propensity to acquire for growth when flush with
liquidity, we expect a robust M&A outlook as these mature firms
continue to draw in private capital."
Key highlights from the report include:
- Venture capital investments in APAC-based fintechs surged to
a record high of $15.69 billion in
2021, more than double the prior year's figure of $5.87 billion. While this growth followed
subdued funding activity in 2020, the 2021 figure also represented
a 74% jump from 2019's pre-pandemic levels.
- Payment companies ranked in the largest amount of funding,
reflecting investors' bullishness in the sector as the region noted
a huge surge in digital payments amid the pandemic. In APAC,
the uptake in cashless payments has largely come from non-card
payment methods with fintech arms of large digital conglomerates
increasingly taking market share.
- Consumers' shift to mobile payments has adversely impacted
banks, which have historically focused on growing their lucrative
credit card businesses. In 2020, we estimated that Southeast
Asian banks lost $778 million in
interchange revenue in Singapore,
Malaysia, Thailand, and Indonesia as credit card activity took a hit,
while Indian banks lost $524 million
in fiscal 2021 ending March 31,
2021.
- In response to the potential threat of banks being
disintermediated in the payment value chain, central banks across
several countries in the region have launched interbank systems for
retail payments to help incumbents stay relevant. While
real-time payment systems may help lenders wrestle back market
share in payments, the low transaction charges and waiving of fees
in these payment schemes limit revenue opportunity.
- While fintechs may be encroaching on banks' turf, incumbents
seem to have recognized that maintaining a collaborative
relationship with the technology players may be their best bet at
staying competitive. Over the years, large APAC banks have been
increasing their investments in fintech companies in hopes of
tapping new customer segments and revenue streams.
To request a copy of the 2022 APAC Fintech Market Report, please
contact pressinquiries.mi@spglobal.com.
S&P Global Market Intelligence's opinions, quotes, and
credit-related and other analyses are statements of opinion as of
the date they are expressed and not statements of fact or
recommendation to purchase, hold, or sell any securities or to make
any investment decisions, and do not address the suitability of any
security.
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SOURCE S&P Global Market Intelligence