New Delhi [India], February 25 (ANI): Despite pandemic challenges, India saw the second-best year for fintech funding and attracted 2.7 billion dollars in investment last year, the second highest amount ever next to 2019's peak of 3.5 billion dollars, professional services firm KPMG said on Thursday.

Payments remained the hottest area of investment followed by insurtech and wealthtech, it said in a report titled 'Pulse of Fintech H2'20.'It said fintech investors adjusted their strategies in second half of 2020, moving away from both early stage companies and lending-based businesses and towards later stage companies. Investors also focused more on profitability.

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.

To boost digital transactions and the fintech industry, the government has proposed significant 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 lockdown months.

Sanjay Doshi, Partner and Head of Financial Services Advisory at KPMG in India, said many 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 -- banking-as-a-service platforms."Given the increase in demand for digital payments, contactless payments and e-commerce platforms, fintech investment is expected to remain robust well into 2021, according to the report.

Corporate investment is expected to be particularly strong as incumbent businesses continue to work to accelerate their digital transformation efforts.

In addition to payments and platform models, B2B solutions will likely be a very hot area of investment globally in 2021, including such areas as embedded finance and 'buy now, pay later' solutions.

Blockchain is also expected to gain traction as blockchain-based solutions and digital asset offerings become more mainstream, said the report.

The overall global fintech funding across MA, PE and VC totalled 105 billion dollars across 2,861 deals in 2020, the third highest level of investment in fintech ever.

With the exception of MA -- which saw deal value drop over 50 per cent (from 130 billion dollars in 2019 to 61 billion dollars 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.

Following a short Covid-19 driven pause in H1 2020, fintech investment bounced back strongly in H2, more than doubling from H1 (33.4 billion dollars) to H2 (71.9 billion dollars).

The United States was the dominant benefactor for fintech investment in 2020 while the payments space continued to dominate investment from a sector perspective, said the report. (ANI)