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Fintechs drive venture capital: KPMG

Venture capital investment in Australian fintechs has grown despite concerns about the pandemic which has seen private equity and mergers and acquisitions activity fall, a new study from KPMG shows.

KPMG's latest Pulse of Fintech report reveals venture capital investment in Australian fintech has grown by 153% year-on-year in first half of 2020 to US$376.5 million.

Despite this, mergers and acquisitions and private equity were down around 50% from US$1.3 billion to US$548 million.

Airwallex and Judo Bank recorded the two biggest transactions in the first half of the year raising US$160 million in venture capital and US$146.6 million in private equity respectively.

KPMG Australia partner and head of fintech Dan Teper said Australia is showing itself to be a strong fintech hub globally.

"As fintechs in Australia aggressively work to scale and maturity, they are expected to drive increasing investment in the space," he said.

In addition, the pandemic has shifted priorities with increased demand for enhanced e-commerce with more customers purchasing online rather than in store.

This has led to investor and funding support to Zip who recently acquired QuadPay and China's Tencent buying shares in Afterpay.

KPMG's global fintech co-leader Ian Pollari said: "COVID-19 will be a key driver for fintech investment heading into H2'20 given the strong acceleration of digital trends - such as the use of contactless payments and the increasing demand for e-commerce and digital service models."

In order to understand how the pandemic has affected the fintech sector, the government re-opened submissions to the Select Committee on Financial Technology and Regulatory Technology.

Teper said the positive investment numbers will be helpful to policymakers hoping to accelerate the fintech sector as a platform for global Australian companies.

"With other jurisdictions also looking to create fintech opportunities, we cannot afford to take our foot off the pedal," he said.

Read more: venture capitalAirwallexDan TeperIan PollariJudo BankKPMG Australia
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