Free Newsletter
Get the hottest Fintech Singapore News once a month in your Inbox
In the first half of 2025, I took a glance at KPMG’s Pulse of Fintech, which at that time read like the sector was taking a breather.
What I meant by that is that investment across Asia Pacific had slowed sharply, valuations were adjusting, and investors were pulling back after years of aggressive deployment.
Six months later, the tone has shifted, although only ever so slightly.
Just like the H1 report, the Pulse of Fintech H2 2025 update does not point to a broad-based recovery, nor does it suggest the return of easy money.
What it does show is a market that is beginning to stabilise, with capital still flowing but under a much tighter scrutiny.
The change is subtle but meaningful.
Compared with the earlier read in H1, where the narrative centred on contraction, the second half of the year reflects something a bit more measured.
Yes, the pullback has not reversed completely, but the pace of decline appears to be easing as investors become more selective about where they place their bets.
So is this the beginning of a genuine reset, or simply a more disciplined funding cycle taking shape?
Funding Still Remains Soft, but the Floor May be Forming
On the surface, the numbers still look subdued as reported by KPMG.
Asia Pacific attracted just US$9.3 billion in fintech investment in 2025 across 763 deals, down from US$11.7 billion the year before.
In the second half alone, the region recorded US$4.6 billion across 362 deals.
Those figures confirm that the funding winter has not fully thawed from last year’s.
Taken from the KPMG Pulse of Fintech H2 2025 page 56.
Compared with the Americas and EMEA, the Asia Pacific continues to lag in absolute investment volumes.
However, the more telling signal is the funding in H2 showed signs of levelling compared with earlier declines
The steep downward trajectory that defined earlier cycles appears to be flattening.
That matters as markets rarely snap back overnight as they tend to always find a floor first.
Selectivity is Replacing Broad-Based Caution
If the past year was about investors stepping back, the latest data suggests they are now stepping forward. But are treading carefully, ever so slightly.
KPMG reported that macroeconomic uncertainty, geopolitical tensions and profitability concerns have continue to weigh on decision-making for most of these investors.
Many fintechs across the region are still rightsizing operations and extending their runway, where none of that has changed materially.
What has changed however is investor behaviour. Capital is no longer retreating indiscriminately as instead, it is now concentrating.
The report repeatedly points to a market that is becoming more disciplined.
Investors are prioritising scalable business models, clearer paths to profitability and technologies that can deliver measurable efficiency gains.
The era of funding growth at all costs is giving way to something more sober.
In many ways, this mirrors the natural maturation of the sector.
After a decade of rapid expansion, Asia Pacific fintech is being forced to prove its fundamentals.
AI Moves From Experiment to Investment Magnet
And nowhere is this shift clearer than in artificial intelligence.
AI has been a jargon slang in fintech circles for several years, but in 2025, it began to translate into real capital flows.
Globally, AI-focused fintech investment climbed to US$16.8 billion, and Asia Pacific is increasingly part of that story.
What investors are backing, however, is telling. The focus is less on flashy consumer applications and more on embedded financial infrastructure.
Financial institutions across the region are exploring generative AI, large language models and emerging agentic AI capabilities, particularly in areas such as compliance, fraud detection, risk management and operational automation.
The emphasis is pragmatic.
Banks and insurers are looking for tools that reduce cost, improve accuracy and streamline complex workflows. AI is being evaluated less as a novelty and more as core plumbing.
For fintech startups, this raises the bar.
According to the report, firms hoping to attract capital will need to demonstrate genuinely differentiated intellectual property and real business impact.
Simply layering AI onto an existing product is unlikely to be enough.
Infrastructure Plays Begin to Dominate Investor Interest
Closely linked to the AI story is a broader reorientation towards infrastructure and efficiency.
Across payments, regtech and core banking technology, investors are showing a growing preference for platforms that support the underlying financial system rather than purely consumer-facing propositions.
The payments sector itself illustrates this shift.
Total global payments investment remained relatively flat at US$19.2 billion in 2025, but deal volume fell to a nine-year low.
Taken from the KPMG Pulse of Fintech H2 2025 page 17.
Fewer companies are getting funded, but those that do tend to be larger, more established players.
Within payments, B2B infrastructure has been drawing increasing investor attention in the second half of the year.
Demand is rising for modular platforms that can support cross-border transactions, integrated compliance and multi-rail orchestration.
This is a notable change from the previous cycle, when much of the excitement centred on digital wallets and super apps.
Those models are not disappearing, particularly in emerging markets, but they are no longer commanding the same premium attention from investors.
Where the Biggest Deals Are Landing
The shift towards more disciplined capital deployment is also visible in the region’s largest transactions.
Data from KPMG’s latest report shows that the top fintech fundraisings in H2 2025 were concentrated in more established platforms and infrastructure-oriented players rather than early-stage consumer disruptors.
India’s PhonePe led the pack with a US$600 million late-stage round, underscoring continued investor confidence in scaled payments ecosystems.
Other notable transactions included Hong Kong-based AlloyX (US$350 million), cross-border payments player Airwallex in Singapore (US$330 million), and Japan’s back office platform Upsider (US$313.7 million).
Risk and compliance-focused firms such as PremiaLab also featured prominently, with a total of US$220 million.
Payments specialists remained well represented, with South Korea’s Toss (US$200 million) and Indonesia’s Honest (US$140 million) both securing significant late-stage backing.
Rounding out the list were consumer finance provider Snapmint (US$125 million), wealthtech player Raise Fintech Ventures (US$120 million), and the Metropolitan Stock Exchange (US$144.4 million), all coming from India.
Taken from the KPMG Pulse of Fintech H2 2025 page 60.
Digital Assets Quietly Rebuild Credibility
Another development worth watching is the steady rehabilitation of the digital assets sector.
After two difficult years marked by market volatility and regulatory uncertainty, global investment in digital assets nearly doubled to US$19.1 billion in 2025.
While the Asia Pacific share remains modest compared with the United States and Europe, the region continues to play an active role in evolving regulatory approaches.
Several Asian jurisdictions have been actively refining their stance on crypto and stablecoins.
Hong Kong, for instance, has been advancing its stablecoin licensing regime, while other markets across the region continue to explore tokenisation frameworks and central bank digital currency initiatives.
At the same time, policy divergence remains pronounced.
China continues to maintain a strict ban on most crypto-related activities, highlighting the fragmented nature of the regional landscape.
What stands out in the H2 report is the growing participation of traditional financial institutions.
Corporates are exploring stablecoins for treasury management, cross-border payments and money market fund tokenisation.
The conversation is shifting away from speculative trading towards regulated financial infrastructure.
That evolution may prove critical for the sector’s long-term credibility.
Taken from the KPMG Pulse of Fintech H2 2025 page 26.
What to Watch in 2026
The outlook for the coming year is cautiously constructive. The report points to several forces that could shape the next phase of fintech development across Asia Pacific.
Artificial intelligence is expected to remain a major draw for investment, particularly where solutions can demonstrate measurable business impact rather than incremental automation.
Consolidation among smaller fintech firms is also likely to continue as companies pursue scale and more sustainable unit economics.
At the same time, progress in digital asset regulation could determine how quickly institutional participation deepens across the region.
Compared with the first half of 2025, the direction of travel now looks more defined. Earlier in the year, the story was largely about contraction and correction.
By the second half, the emphasis has shifted towards discipline, with capital still flowing but into a much narrower set of business models and technologies.
Whether this marks the start of a healthier fintech cycle or simply a more selective funding environment remains an open question.
What is becoming clear is that the era of easy capital has fundamentally reshaped investor expectations.
If the past decade rewarded the fastest disruptors, the next phase may favour something totally different.
Featured image: Edited by Fintech News Singapore based on an image by Who is Danny via Freepik.
