Fintech investments down more than 45% since 2015

GLOBAL fintech companies took a sharp drop last year with fintech investments dropping more than 45 percent following a record haul in 2015.

A KPMG quarterly report on global investments said total global funding for fintech companies last year declined 47.2 percent to $24.7 billion (R320bn) following the record $46.7bn in 2015.

The report said mergers and acquisitions as well as private equity deals dropped considerably last year while total venture capital investment reached $13.6bn .

Joelene Pierce, a partner in financial services for KPMG South Africa said while fintech in South Africa and the continent had not seen higher levels like other global jurisdictions, there was an accelerating trend of it becoming the focus of investors.

“However this is virtually immaterial compared to the annual spend on IT between the South African banks, as well as the insurance, health and wellbeing sectors,” Pierce said. “A significant amount of such ‘in-house’ spending on intech is expectedly in the form of enterprise development advances to start-ups and SMEs, developing fintech products and services, as well as corporate venture capital type deals.”

Brian Hughes, co-lead partner for KPMG Venture Capital Practise at KPMG in the US said the outlook for this year was shaping up to be a pivotal year for fintech globally.

Hughes said as valuations had corrected, the fintech market would probably rise next year.

Mergers and acquisitions as well as private equity deals dropped last year.

“An increasing number of exits will likely only stimulate demand for new investments thanks to the dry powder already present in the market,” Hughes said.

Meanwhile, global business matchmaking platform, Opportunity Network, has set its sights on Africa and plans to launch in South Africa this year.

Brian Pallas, founder and chief executive for Opportunity Network said the development of online business had gathered pace on a global scale against the backdrop of a rapidly evolving network economy in recent years.

He said the company had more than 6 000 live listed deals on the platform, with an aggregated value of more than $35 billion.

“Personal introductions and meet-ups are still important, but we see an increasing demand from companies looking for high quality digital channels that can help them meet their growth objectives in a secure and convenient manner, and we believe South Africa offers expanding business opportunities,” Pallas said.