VC investment in fintech (financial technology), however, remains strong in India.
The report - Pulse of Fintech published jointly by KPMG International and CB Insights -- said that overall global investment in fintech companies across both venture-backed and non-venture-backed companies totalled US$9.4 billion in the April-June quarter (Q2).
In the period under review, VC-backed fintech companies raised US$2.5 billion across 195 deals, a 12 percent drop in deal volume compared to January-March period of 2016.
"Despite VC backed funding to fintech decreasing in Q2, overall fintech funding remains on track to surpass 2015 levels.
"Traditional financial institutions and banks of all sizes are realising that the opportunities associated with fintech are not about who has the deepest pockets - and so they are intensifying their innovation efforts," said Ian Pollari, Global Co-Leader of Fintech, KPMG International.
"The decline in fintech financing and deals is in line with what we're seeing in the broader venture environment for startups, as VCs as well as crossover investors are pushing back harder on profitability and business model concerns," said Anand Sanwal, CEO of CB Insights.
In India, lending companies in the SME and P2P space attracted investments this quarter with Bengaluru and Mumbai bagging the top deals.
"We continue to see investment in key areas such as payments and mobile wallet as well as increased momentum in emerging areas like robo advisory," said Neha Punater, Partner and Head of Fintech, KPMG in India.
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