Singapore’s fintech funding has hit a three-year high at US$4.1 billion ($5.47 billion) in 2022, up 22% y-o-y, according to KPMG’s Pulse of Fintech report for the 2H2022. The figure is also Singapore’s second highest fintech investment over the decade, behind 2019’s showing of US$5.62 billion just before Covid-19.
The US$4.1 billion was spread across 250 deals in mergers and acquisitions (M&A), private equity (PE) and venture capital (VC) over the year.
Singapore’s positive showing comes amid the backdrop of falling investments in the global fintech sector, says the professional services firm. During the 2H2022, global fintech investments plunged by 62.3% h-o-h to US$44.9 billion from 1H2022’s US$119.2 billion.
“The sharp drop-off in fintech investment between 1H2022 and 2H2022… highlights the rapidly shifting market conditions much more clearly,” says KPMG in its statement on Feb 16.
While the first half of 2022 saw “numerous” deals of US$1 billion and above, including eight mergers and acquisitions (M&A), two VC raises and one PE deal, the second half of the year saw just three M&A deals over US$1 billion. The largest VC raise in the 2H2022 was at US$800 million while the largest PE deal was at US$250 million.
“2022 was a tale of two fintech markets. The variance between the first half of the year and the second highlights the rapid shift in investor sentiment amidst a combination of challenges—high inflation and rising interest rates, the lack of initial public offering (IPO) exits, the downward pressure on valuations, and, of course, the turbulence in the crypto space,” says Anton Ruddenklau, global head of financial services innovation and fintech at KPMG International.
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“But the news wasn’t all negative. Regtech, in particular, saw incredible investment in 2022, while seed-stage deals received excellent attention from investors after years of late-stage deals getting priority,” he adds.
Global fintech deals and top three areas for fintech investments
Globally, the fintech market attracted some US$164.1 billion across 6,006 deals in 2022, 31.3% lower y-o-y.
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The top three areas for fintech investments around the world in 2022 were payments, crypto/blockchain and regtech. Though the payments space saw the largest share of fintech funding at US$53.1 billion, regtech saw the highest growth with a 57.6% y-o-y growth to US$18.6 billion in 2022.
In Singapore, the top three areas were in crypto/blockchain, payments and wealthtech.
Americas remained dominant
Regionally, the Americas were the highest in terms of fintech investments, accounting for US$68.6 billion in investments in 2022. The US alone accounted for US$61.6 billion of the region’s total.
The Asia-Pacific (APAC) region reached a marginal new high of US$50.5 billion in 2022 while the EMEA region, which stands for Europe, the Middle East and Africa, attracted US$44.9 billion.
In KPMG’s report, the firm identified four key trends, which are investors shifting to non-crypto blockchain-based solutions; payments remaining the strongest area in fintech investments; the cost of compliance remaining the key driver of interest in regtech; and expanding access to a broader base of investors.
