The global fintech market continued to face challenges in the first six months of 2023 — high levels of inflation, rising interest rates, the ongoing Russia-Ukraine conflict, depressed valuations and a lack of exits were expected; others were less so, including the collapse of several banks in the US.
Total fintech funding and the number of fintech deals globally dropped from US$63.2 billion across 2,885 deals in H2’22 to US$52.4 billion across 2,153 deals in H1’23. In the Asia Pacific, fintech funding softened from US$6.8 billion in H2'22 to US$5.1 billion in H1'23.
Following global trends, interest in artificial intelligence took off with investors and corporates seeking ways to leverage AI generated content (GC) within fintech use cases. In particular, there is strong interest in AIGC use cases focused on marketing and customer engagement to upgrade customer experiences.
Whether you’re the CEO of a large financial institution or a founder of an emerging fintech, it’s critical to consider how your company can grow sustainably and profitably even in these uncertain times. Read our Pulse of Fintech H1'23 report for insights on how you can position your organisation to weather today’s storms while positioning for long-term success.
The fintech landscape in Singapore
AI fintech funding in Singapore surged to an impressive US$333.13 million in H2’23, a significant 77 percent increase from the US$148.08 million recorded in H1’23. This culminates in a total AI sector investment of US$481.21 million across 24 deals in 2023 in Singapore. Amidst this AI funding boom, companies have been rapidly innovating and launching AI-driven products to secure a competitive advantage.
Singapore continues to dominate Asia Pacific's fintech landscape in 2023
Despite a global slowdown in the fintech sector, Singapore has emerged as a leader in the Asia Pacific region, accounting for 21 percent of all fintech deals. 2023 also saw some significant fintech deals in Singapore, such as a venture capital deal with digital bank AnextBank which raised an impressive US$359 million.
In an environment fraught with challenges, investors shifted their focus towards early-stage companies, resulting in 74 deals, and seed funding, leading to 63 deals. These transactions were primarily responsible for smaller deal sizes. This trend underscores a strategic move by investors to diversify risk while remaining committed to exploring, learning, and assessing the commercial viability of a diverse array of next-wave fintech business models.
Singapore's crypto, payment, and insurtech sectors showed resilience amid market fluctuations
The crypto/blockchain subsector remained the top fintech focus in Singapore in 2023, with investments totalling US$626.8 million across 88 deals, compared to US$1,169.8 million across 131 deals in 2022.
Singapore's insurtech sector experienced a significant surge in investment during H2’23, marking a 194 percent increase to US$284.1 million from US$4.1 million in H1'23. In an apparent pivot, insurtech firms are now focusing on addressing specific pain points within the insurance value chain, including claims management, rental market solutions, and broker enablement.
Despite a drop in annual investment from US$984.78 million in 2022 to US$186.13 million in 2023, the payments sector sustained one of the largest shares of fintech investment in Singapore. The resilience of this sector is evidenced by the stability in deal volume, maintaining 23 deals in 2022 and slightly increasing to 24 deals in 2023.
For more Singapore, regional and global insights, download the full report.