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The week in fintech: Asian fintech investors set sights on global markets

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The week in fintech: Asian fintech investors set sights on global markets

This weekly recap features updates on bank technology, payments, online lending and other news in the financial technology space. Send tips, ideas and chatter to kate.garber@spglobal.com. For other recent fintech news, click here.

Asian investors and financial technology companies are teaming up to go global, and a recent report suggests that fintech investment activity in Asia may soon accelerate.

Atlanta-based small-business lending startup Kabbage Inc. said Aug. 3 that it received $250 million in equity funding from Japanese technology conglomerate SoftBank Group Corp. Kabbage operates in North America and Europe, but plans to launch in Asia within the next 18 months. The company said the investment will help it expand lending products and explore non-lending products and services for its customers.

Safwan Zaheer, fintech program director for KPMG U.S., said online lenders are eager to move beyond their initial, proven markets, and global investors are in search of solutions that can scale in several markets.

"Asia continues to eye global markets for its expansion," he said, adding that investors in that region are considering a combination of partnerships and investments to facilitate that expansion.

KPMG's fintech report for the second quarter suggests that Asia saw fairly muted investment growth quarter over quarter, possibly due to a lack of "mega deals." But that may change in coming quarters. KPMG said more activity is expected, particularly from large technology and payments companies focused on international growth.

"Southeast Asia is set to become a key battleground as competition heats up in the payments space," KPMG wrote.

More broadly, the report noted that total second-quarter fintech investment more than doubled on a quarter-over-quarter basis to more than $8.4 billion. Venture capital funding remained steady, while private equity and M&A funding drove the increase.

Also this week, news broke that Prosper Marketplace Inc. has been approached by Chinese conglomerate Linca Industrial (Fujian) Group Co. Ltd. about selling a roughly 10% stake, "people familiar with the matter" told The Wall Street Journal. The San Francisco Business Times cited a report that said the rumored Chinese company's investment would reduce Prosper's valuation by 70%.

Automatic Data Processing Inc. said activist investor Pershing Square Capital Management LP is "seeking control" of the company by trying to shake up its board and oust CEO Carlos Rodriguez. Pershing Square's William Ackman recently notified ADP of the hedge fund's 8% beneficial ownership in the company.

Digiliti Money Group, Inc.'s stock price crashed in morning trading Aug. 4, as the company raised doubts about its ability to run its operations following a "unilateral noncontractual termination" by a customer. Digiliti Money shares were down 61.75% to 7 cents shortly after noon.

On Aug. 1, Bitcoin Cash became the latest cryptocurrency on the market after forking, or splitting, from the main Bitcoin network. Network users and investors now have two flavors of Bitcoin to choose from, each with unique features that will help decide which network will become dominant, according to Eric Turner, a fintech analyst at S&P Global Market Intelligence.

In the insurance technology space, startup Lemonade Insurance Co. has officially launched operations in New Jersey.

In Washington, the Office of the Comptroller of the Currency filed a motion to dismiss a lawsuit that seeks to prevent it from issuing bank charters to financial technology companies.

From July 27 to Aug. 3, the SNL U.S. Financial Technology Index fell 0.55%.

S&P Global Market Intelligence released a fintech primer on four areas — digital lending, payments, blockchain and digital wealth management — of particular interest due to their rapid pace of growth, technological disruption, and regulatory and other risks. Click here to read the primer.