The global fintech market had its most difficult year since 2017, with investments falling to $113.7 billion. Singapore’s AI fintech sector funding increases by 77%.
The latest edition of KPMG’s Pulse of Fintech report highlights a challenging year for the global fintech market in 2023, with significant downturns in investment levels and transaction activity. Global fintech investment fell to $113.7 billion across 4,547 deals, the weakest performance since 2017, and down significantly from $196.6 billion across 7,515 deals in 2022. The downturn reflects broader trends that investors are paying attention to amid a complex backdrop of high interest rates and inflation. , geopolitical tensions, and valuation concerns.
The Asia Pacific (ASPAC) region showed the largest decline, with investment plummeting from $51.3 billion in 2022 to $10.8 billion in 2023. Meanwhile, fintech investment decreased in Europe, the Middle East, and Africa (EMEA). From $49.6 billion to $24.5 billion. The Americas are also experiencing declines, but have shown relative resilience, with fintech investment falling from $95.4 billion in 2022 to $78.3 billion in 2023, with the U.S. alone accounting for $73.5 billion of total funding.
Despite the overall economic downturn, some subsectors have shown remarkable resilience and even growth. Investment in the payments sector declined from $57.9 billion in 2022 to $20.7 billion in 2023, but still accounted for the largest share of fintech financing. In particular, the proptech and insurtech subsectors bucked the trend and continued to be areas of investor interest, with investments increasing to $13.4 billion and $8.1 billion, respectively.
A.I (AI) continued to lead fintech technology investments despite the funding slowdown, attracting more than $12.1 billion. This signals continued confidence in the potential of AI to drive innovation and efficiency within the fintech sector.
Singapore’s fintech market in particular has shown resilience and strategic adaptability. AI fintech funding in Singapore increased 77% to $333.13 million in the second half of 2023, contributing to a total of $481.21 million across 24 deals this year. This increase in AI funding demonstrates the region’s commitment to fostering technological innovation amid broader market challenges. However, overall fintech investment in Singapore has declined, mirroring global trends, with total funding falling 68% from $4.4 billion in 2022 to $2.2 billion in 2023. Despite these challenges, Singapore continues to solidify its position as a leading fintech hub. Account for 21% of all fintech transactions in Asia Pacific by 2023
Going forward, the fintech sector globally is expected to face continued caution in early 2024, with a possible rebound later in the year as interest rates are expected to cut. The growing focus on AI and B2B solutions and the growing interest in mergers and acquisitions as a strategy to acquire distressed assets signal a strategic shift towards a more sustainable, profitability-focused investment approach.
Image source: Shutterstock