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Given Asia-Pacific’s rich technology ecosystem, rapid economic growth trajectory and growing middle class, the region has long been tipped for major digital growth. APAC’s recent activity in financial and insurance technology investments, startups and innovation labs shows it is excelling in embracing digital disruption.
Financial technology investment in Asia-Pacific more than quadrupled in 2015 to $4.3 billion. It is now the second biggest region for fintech investment after North America, accounting for nearly a fourth of global financing activity and up from just 6 percent in 2010.
China has the lion’s share of investment, accounting for half of the grand total in 2015, but India makes up 38 percent and is growing fast. By the number of deals, the major fintech hubs in the region are Mumbai, Bangalore, Tokyo and Beijing.
Globally, 78 percent of investments went to fintech companies targeting the banking industry. In APAC specifically, payments is the most popular segment for fintech deals, accounting for 38 percent of the total.
Furthermore, an increased interest in some of the newer fintech segments has helped spur on investment into the sector. Insurance is rapidly emerging as the next big thing in fintech, with investment into firms with insurtech propositions more than tripling from 2014 to 2015, to approximately $2.6 billion.
Among the insurtech startups receiving funding in 2015 are Lemonade ($13 million), PolicyGenius ($15 million) and the largest one, China’s first online-only insurer Zhong An ($934 million).
Some insurers are also creating innovation labs or teams to nurture their next generation of digital talent and solutions, which is an important part of the growing ecosystem. MetLife Asia’s LumenLab innovation center in Singapore is home to innovation experts, many of whom have a background in startups or come from outside the insurance industry.
In 2014, the Fintech Innovation Lab, founded by the Partnership Fund for New York City and Accenture, expanded to Hong Kong. More than 50 financial institutions participate in the program globally, which brings leading financial services firms together to identify and mentor the most promising fintech innovators. Now in its sixth year globally, the Fintech Innovation Lab has produced many successful collaborations for banks, with more than 90 graduates across the four Lab locations: London, New York, Hong Kong and Dublin.
So far in 2016, $5.3 billion has poured into the fintech sector in the first quarter, largely driven by two Chinese deals each crossing the $1 billion threshold. In fact, fintech companies in APAC received more than half of all investment in the first quarter. This 47 percent year-over-year growth is a sure sign that both fintech and the region are poised for another stellar year.
Insurers can follow these Digital Transformers’ lead by proactively defining their position in new ecosystems, cooperation models and partnerships.
Learn more about fintech investments by reading the full report: Fintech and the Evolving Landscape: Landing Points for Industry
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