ASPAC region sees fintech investment fall more than 75%
It was a challenging year for fintech investment in the ASPAC region, with only $10.8 billion in investment across 882 deals in 2023, compared to $51.3 billion across 1,537 deals in 2022. H2’23 was somewhat slower than the first half of the year, with fintechs attracting $3.4 billion in investment, as compared to $7.4 billion. VC deals accounted for the largest deals in H2’23, with raises by Hong Kong-based Micro Connect ($458 million) and Singapore-based boltech ($246 million). Three other ASPAC jurisdictions also attracted $100 million fintech deals in H2’23, including Indonesia (Investree – $231 million PE raise), India (Perfios – $229 million VC raise, Chaitanya – $178 million M&A), and Japan (Gojo & Company – $110.6 million).
Key H2’23 highlights from the Asia-Pacific region include:
Lack of exits a contributor to declining VC investment in ASPAC
A stalled exit environment likely contributed to the low levels of fintech-focused VC investment in the ASPAC region during 2023, with IPO markets particularly quiet in both China and Hong Kong (SAR), China. Without exit opportunities, VC investors have been quite reluctant to make major investments, particularly at later deal stages.
AI-focused solutions gaining investor attention
AI was one of the hottest areas of investor interest in the ASPAC region during 2023, given its widespread applicability across areas like wealth management, payments, and insurtech. Over the course of the year, a growing number of startups looked to embrace large language models and to develop unique applications of AI for the fintech space.
Fintech sector in China maturing, changing nature of investment
In China, the fintech sector is no longer viewed as a truly emerging tech sector, with a growing number of mature fintech companies and fintech offerings — like buy now, pay later — considered a normal part of the financial services ecosystem in the country rather than as pure startups. With a growing stable of mature fintech companies, many of which have developed more sustainable cash flows — the need for large capital raises in China has declined considerably.
Enablement of fintechs becoming a major focus for fintechs
Across Asia, there has been a strong focus on the enablement of financial institutions, with a growing number of startups looking for ways to enhance the activities of financial institutions rather than ways to entirely disrupt financial services industries.
Singapore and Japan prioritize crypto space in bid to become market leaders:
Crypto attracted a lot of attention in the ASPAC region during 2023, with a number of jurisdictions working to enhance regulations in a bid to become global market leaders in the sector. Stablecoins were a particular focus for regulators during the year, with Japan enacting legislation to govern the issuing of stablecoins in H1’231 and Singapore finalizing its regulatory framework for stablecoins in H2’23.2 Singapore also introduced new rules for its Digital Payment Token providers in order to better ensure the safeguarding of customer assets.
Trends to watch for in H1’24
- Continued focus on leveraging AI and AIGC as part of solutions aimed at enabling the financial services sector.
- China-based fintechs working to expand globally, particularly in regions like Southeast Asia and Latin America.
- Insurtech and wealthtech growing on the radar of fintech investors.
- Japan and Singapore continuing to find ways to encourage activity in the crypto space.
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Key Contact
Anton Ruddenklau
Global Head of Financial Services Innovation and Fintech, KPMG International
Key Contact
Karim Haji
Global Head of Financial Services, KPMG International
Key Contact
Andrew Huang
Partner, Financial Services Audit, KPMG in China
1 https://asia.nikkei.com/Spotlight/Cryptocurrencies/Japanese-banks-prepare-to-launch-stablecoins
2 https://www.mas.gov.sg/news/media-releases/2023/mas-finalises-stablecoin-regulatory-framework/