China fintech firms looking at ways to leverage AI- generated content, KPMG analysis finds

ASPAC cities looking to become global crypto hubs

15 August 2023

15 August 2023, Hong Kong (SAR), China ("Hong Kong") – Following on trends seen globally, interest in AI took off in the ASPAC region (including China), with both investors and corporates looking for ways to leverage AI- generated content (AIGC) within fintech use cases, according to KPMG's Pulse of Fintech H1’23 report.

Andrew Huang, Partner, Financial Services, Audit, KPMG China, says:

A number of startups are focused on developing AI and AIGC use cases for the fintech industry, but there have not been any mature applications to date in the fintech space. That said, there is enormous interest in AI, so more material AIGC-related applications will likely begin to appear over the next six months to a year.

In the ASPAC region, interest of AI particularly focused on marketing and customer engagement to upgrade customer experiences. While China has restricted access to ChatGPT, the country’s tech giants, including Baidu, Tencent, and Alibaba, all have their own large language models (LLMs). It is expected that these LLMs could be used as a basis to support AIGC use cases in the fintech sector heading into the second half of this year and into 2024.

Another fintech area that gained increasing attention in Asia Pacific during the first half of 2023 was logistics and supply chain finance, and this area is expected to remain top of mind heading into the second half as traditional manufacturing companies and others look to become more efficient across their end-to-end operations.

Fintech funding in Asia Pacific was soft during the first half of 2023, reaching USD 5.1 billion with 432 deals, a decline from USD 6.7 billion in the second half of 2022. Following the largest deal of USD 1.5 billion raised by China-based Chongqing Ant Consumer Finance, other deals in the region were significantly smaller, including the USD 304 million buyout of India-based SME lending company Vistaar Finance by PE firm Warburg Pincus, the USD 270 million raise by Singapore-based credit services firm Kredivo Holdings, and a USD 200 million raise by India-based digital lending platform Creditbee.

Barnaby Robson, Partner, Deal Advisory, KPMG China, says:

We are seeing divergent stances taken towards cryptocurrency globally and within Asia Pacific. Hong Kong has announced a range of measures to establish a strong crypto ecosystem, and approved its first retail crypto exchange in August 2023, re-establishing Hong Kong as Asia’s premier crypto hub.

Going forward one can expect increasing focus on ESG-focused fintechs and green finance, as well as the use of AI and AIGC, particularly in improving the customer experience. Moreover, the space will see fintechs continue to focus on fintech enablement rather than on direct competition.

Fintech investors in China have been taking a wait-and-see approach, expecting start-ups that they have previously funded to prove their value and outcomes before making more deals. The decline in funding in China likely reflects businesses prioritizing their post-pandemic recovery, including strengthening their business models.

-Ends-

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