Asia Pacific (ASPAC)’s fintech deal value and deal volume dropped from an already soft $11.7 billion across 1,028 in 2024 to $9.3 billion across 763 deals in 2025 — levels not seen in over ten years, KPMG said in its recent report.

According to the report, the drop was driven by a number of factors, including geopolitical tensions, macroeconomic factors, and continued caution on the part of fintech investors.

Total fintech investment was relatively steady between the first and second half of the year — with $4.8 billion across 401 deals and $4.6 billion across 362 deals respectively.

While deal sizes were relatively soft compared to historical norms, a range of jurisdictions attracted $100 million+ deals during the second half of 2025, including Australia-founded, now Singapore-based, Airwallex — which raised a $330 million venture capital (VC) round, the purchase of majority stake in Japan-based artificial intelligence (AI)-driven business credit solutions firm Upsider by Mizuho Financial Group for $313.6 million, a $200 million VC raise by South Korea-based fintech super app Toss, and a $140 million VC raise by Indonesia-based credit card issuer Honest.

According to the report, VC investment accounted for the lion’s share of fintech investment in the ASPAC region during 2025, accounting for $7.5 billion across 672 deals, while merger and acquisition (M&A) activity accounted for $1.7 billion across 82 deals, and private equity (PE) activity accounted for just $101.8 million across nine deals.

A number of jurisdictions in the ASPAC region saw a slowdown in investment between 2024 and 2025.

In China, total investment fell from $991.7 million to $876.1 million year-over-year — driven by a combination of persistent economic challenges, geopolitical tensions, and increasingly tight regulations.

In Australia, fintech investment fell from $1.9 billion to $609 million as the market continued to experience some rightsizing.

South Korea — a relatively nascent fintech hub in the region — was one exception to the fintech investment downturn in 2025; it saw fintech investment rise from $245.6 million to $402.4 million year-over-year — although half of this investment came from Toss’s $200 million VC raise.

“Across the fintech landscape we’re seeing some of the smaller providers looking at consolidation to drive scale and maintain relevance, as well as broaden capability among firms targeting slightly different parts of the market and customer cohorts,

“These kinds of consolidation deals almost always make sense because they create more longevity, profitability and sustainability,” said Daniel Teper Partner, M&A and Head of Fintech KPMG Australia.

The report also highlighted that AI continuing to be a key focus for investors across the ASPAC region – including large language models (LLMs), generative AI applications and agentic AI – with increasing focus on real world solutions in the first half of 2026.

Meanwhile, there is a growing focus on turning data into variable and tradable assets, in combination with an increasing focus on privacy computing.

The report also showed China-based fintechs are embracing dual-market routes to grow overseas – replicating domestic payments and microcredit models in emerging markets, while focusing on more transformative solutions in mature markets.

Macroeconomic and geopolitical uncertainties continuing to drive caution among fintech investors, including the protracted economic slowdown in China and increasing concern that inflationary pressures in Australia could lead to a rate increase, according to KPMG.

It noted that financial institutions in Australia which are prioritizing fintechs are able to help them drive efficiencies and cost reductions.

It also highlighted growth of digital asset capability, incubation and scaling programs across Japan, Korea, Singapore and Australia.

KPMG: Singapore’s fintech investment rebounds to $1.04B in first half