Against the backdrop of higher interest rates, economic uncertainties and geopolitical pressures, investments into fintech firms in Singapore showed resilience and adaptability in the first half of the year, a new report finds.

Deal count rose by 19% to 117 deals, but the value fell 34% to US$522.89 million, compared with US$790.10 million across 98 deals in H2 2023, according to the KPMG Pulse of Fintech H1 24. The cryptocurrency, blockchain and payments segments saw the biggest investments.

A growing mood of caution among investors has resulted in a tighter funding environment, which the report says has seen a shift towards smaller, early-stage investments rather than large-scale deals. In Singapore, this trend is evident with 52 early-stage deals, 32 seed rounds, 25 later-stage investments, and five M&A transactions recorded.

Amid increased regulatory scrutiny, the cryptocurrency and blockchain segments of Singapore's fintech market still recorded US$211.90 million across 72 deals in H1 2024, a 22% uptick from the US$166.30 million over 38 deals recorded in the previous six months. Globally, crypto and blockchain stabilized at US$3.2 billion after previous declines.

The payments segment in Singapore secured the second-highest investment, attracting US$80.20 million across 10 deals in H1 2024, though this marked a 78% decline from US$142.65 million across 14 deals in H2 2023. 

A US$50 million venture capital (VC) raise by Singapore-based B2B payments platform Nium was the largest payments deal in Asia-Pacific during the period.

Early-stage deals thriving

After a surge in H2 2023, the ubiquitous artificial intelligence (AI) segment saw its funding stabilize with investments falling to US$65.62 million across 10 deals in H1 2024, down from US$333.13 million over 14 deals.

The wider Asia-Pacific region saw fintech investments fall to US$3.7 billion in H1 2024, from US$4.6 billion in the previous six months. Smaller deal sizes accounted for the decline, with a US$280 million VC raise by China-based capital markets solutions firm Yi'an Enterprise accounting for the largest deal during the period.

This was followed by a US$209 million VC raise by India-based personal loans platform KreditBee, a US$195 million VC raise by Thailand-based digital financial solutions firm Ascend, and US$150 million VC raises by China-based ESG financial solutions firm MioTech and Australia-based performance management firm Camms.

“The volume of early-stage deals globally has been thriving both because of the interest in new technologies, such as AI applications, and newer business models to meet the changing nature of the financial services sector,” says Anton Ruddenklau, global head of fintech and innovation, financial services, at KPMG International.

The rise of "platforms" continues to gain momentum as decentralization, data aggregation, and ecosystem connectivity become mainstream, Ruddenklau adds.