Despite a widespread slowdown in the fintech sector, Singapore bucked the trend in 2023 witnessing a surge in artificial intelligence (AI) fintech funding, with environmental, social and governance (ESG) fintech solutions, and the payment and insurtech sectors, also showing resilence, according to a recent report.

The second half of 2023, finds the KPMG Pulse of Fintech H2 2023 report, witnessed several significant fintech deals in the city-state, among them, a venture capital deal with digital bank AnextBank that topped the list after raising US$359 million, and insurtech firm Bolttech securing US$246 million in funding.

These deals and others helped make Singapore the fintech funding leader in the Asia-Pacific region, accounting for a robust 21% of all fintech deals.

Singapore AI fintech funding also soared to US$333.13 million in the second half of last year from US$148.08 million in the first, marking an impressive 77% rise.

This surge culminated in US$481.21 million being invested across 24 deals throughout the year, signalling a vibrant ecosystem in contrast to global trends.

Globally, however, fintech investments in the AI sub-sector, the KMPG report finds, experienced a sharp slowdown, falling from US$28.1 billion in 2022 to US$12.1 billion in 2023.

ESG focus

The ESG space attracted several very sizeable deals over the course of 2023, the report notes, with the US attracting the vast majority of ESG-focused fintech investment – likely driven by investment trends across the broader fintech sector, rather than by any substantial decline in Asia-Pacific.

ESG-focused fintech investment in Asia-Pacific lagged somewhat last year, with Japan-based Gojo & Company’s raising of US$110.6 million standing out as one the largest deals.

ESG and global, regional and national climate-change commitments, the report suggests, will continue to support both the emergence of new fintech’s focused on a broad range of ESG-related opportunities. These include lending for alternative energy and climate-change projects, carbon tracking and accounting, supply-chain tracking, and property and energy management.

Given climate-change commitments, investment in green fintech, the report stresses, will likely also be an area for long-term investment.

“We’re going to see a lot more focus on the implementation of ESG-related regulations and accounting standards, and it’s going to act as a real tailwind for the entire sector,” says Aymeric Salley, director of financial services advisory at KPMG Singapore. “I feel quite confident predicting that over the next year ESG-focused fintech will grow faster as a sub-segment compared with the broader fintech sector because of this regulatory tailwind that, quite likely, could continue over the next few decades.”