New Delhi, Feb 25 (IANS): The Covid-19 disruptions have given an added push to the development of digital ecosystem in the country as is evident from the increased investor activity in the Fintech sector despite the challenges posed by the pandemic.

According to KPMG's Pulse of Fintech H2'20 report, disruptions have turned into opportunities for the sector with India attracting $2.7 billion in Fintech investment in 2020, the second highest amount ever next to 2019's peak of $3.5 billion.

The attractiveness of the country's Fintech sector for investors has been focused around payments followed by Insurtech and Wealthtech.

Fintech investors adjusted their strategies in H2'20, moving away from both early stage companies and lending-based businesses and towards later stage companies. Also, investors focused more on profitability, the bi-annual report on global Fintech investment trends by KPMG said.

"Competition in the insurance space started to heat up as incumbent insurers enhanced their digital focus due to Covid-19 and niche payments players worked to expand into insurance," the report added.

To boost digital transactions and Fintech industry, the government has proposed to support in their recent Budget announcements, which include a scheme to develop, promote and accelerate digital payments, following a sharp growth in online and contactless payments during the Covid-led lockdown months. This has also made the sector attractive for investors.

"Many of the banks in India are now going down the path of digital. They are looking at tech and Fintech companies that can help them move their digital activities forward, either investing in them directly or using them as service providers. That is going to be a big growth area for investment here in India -- banking-as-a-service platforms," said Sanjay Doshi, Partner and Head of Financial Services Advisory, KPMG in India.

At the global level, funding across M&A, PE and VC was US$105 billion across 2,861 deals in 2020, the third highest level of investment in Fintech ever.

With the exception of M&A -- which saw deal value drop over 50 per cent (from $130 billion in 2019 to $61 billion in 2020) -- the overall Fintech market proved remarkably resilient in 2020 despite a broad array of uncertainties, from the global pandemic to the US presidential election, the report said.

Following a short Covid-19 driven pause in H1'20, Fintech investment bounced back strongly in H2'20, more than doubling from H1'20 ($33.4 billion) to H2'20 ($71.9 billion). The US was the dominant benefactor for Fintech investment in 2020, while the payments space continued to dominate investment from a sector perspective.

The report said that given the increase in demand for digital payments, contactless payments and e-commerce platforms, Fintech investment is expected to remain robust well into 2021. Corporate investment is expected to be particularly strong as incumbent businesses continue to work to accelerate their digital transformation efforts.