KPMG Pulse of Fintech – H2' 2023

• Singapore's AI funding soared by 77 percent to US$481.21 million in 2023 across 24 deals, signifying increasing faith in AI's potential.
• Singapore's crypto, payment, and insurtech sectors showed resilience amid market fluctuations, with investors evolving their strategies.
• Global fintech funding halved from US$196.6 billion (7,515 deals) in 2022 to US$113.7 billion (4,547 deals) in 2023, paralleled by a 68 percent decline in Singapore's fintech investments.
• Despite challenges, Singapore secured 21 percent of Asia Pacific's fintech deals, solidifying its regional prominence.
• The Americas led global fintech funding in 2023, drawing nearly 70 percent of total investments (US$78.3 billion), highlighting its sustained global significance.

SINGAPORE - Media OutReach Newswire - 6 February 2024 - Singapore's fintech sector has witnessed an extraordinary surge in funding for artificial intelligence (AI) technologies, despite a global downturn in fintech investments. The KPMG Pulse of Fintech H2'23 report reveals that AI fintech funding in Singapore skyrocketed to an impressive US$333.13 million in H2'23, marking 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. In contrast, global fintech investments in the AI subsector experienced a slowdown, plunging from US$28.1 billion in 2022 to just US$12.1 billion in 2023. However, this decline in direct investment does not reflect a dwindling interest in AI. Many financial institutions and fintech firms worldwide have chosen to harness the power of AI through strategic alliances and product expenditure, rather than direct investment, throughout 2023. On a broader scale, Singapore's fintech sector amassed total funding of US$2.20 billion, inclusive of mergers & acquisitions (M&A), private equity (PE), and venture capital (VC) deals in 2023. This represents a substantial 68 percent decrease from the US$4.4 billion raised in 2022. Deal activity also saw a sharp decline, halving to 189 in 2023 from the previous year. This downward trend was particularly pronounced in H2'23, with funding falling by 64 percent, from US$1,455 million across 102 deals to US$747 million across 87 deals. "The fintech market floundered somewhat in 2023, buffeted by many of the same issues challenging the broader investment climate. While there were still good deals to be had, investors were definitely sharpening their pencils—enhancing their focus on profitability," said Anton Ruddenklau, Global Head Fintech and Innovation, Financial Services, KPMG International. "While it was a depressed year for the fintech market overall, there were a few particularly bright lights. Proptech, ESG fintech, and investors embraced AI-focused fintechs—which helped particularly in the last six months." This marks the slowest performance for fintech funding since the Covid-19 year of 2020, when only US$1.13 billion was raised across 183 deals. The dampened investor sentiment can be attributed to geopolitical conflicts, a high interest rate environment, and a lacklustre exit environment across regions, which prompted fintech investors to exercise caution and conserve their cash reserves throughout 2023. Furthermore, the increased scrutiny of potential fintech deals, with an emphasis on profitability and avoidance of down rounds, further shaped the funding landscape in 2023. Singapore Continues to Dominate Asia Pacific's Fintech Landscape in 2023 Despite a widespread slowdown in the fintech sector, Singapore has emerged as a leader in the Asia Pacific region, accounting for a substantial 21 percent of all fintech deals in the area. This reinforces its reputation as a premier fintech hub in Asia. The year 2023 saw some significant fintech deals in Singapore. A venture capital deal with digital bank AnextBank topped the list, raising an impressive US$359 million. Close on its heels was insurtech firm Bolttech, which secured US$246 million in funding. Furthermore, the resilience and evolution of Singapore's fintech sector in 2023 were truly commendable. 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. Global Fintech Investment Trends and Top Deals in 2023: A Year of Challenges and Opportunities The global fintech market faced a series of hurdles in 2023, as total...