Financial technology (fintech) investments in China showed a modest recovery at the end of 2023 and continued into 2024, according to KPMG’s Pulse of Fintech H1’24 report.
Among the top ten fintech deals in the Asia-Pacific (APAC) region, five were from Mainland China and Hong Kong, demonstrating resilience despite regulatory challenges, the report stated.
In H1’24, the APAC region recorded $3.8 billion in fintech investments across 438 deals, with China contributing $624 million.
Consumer finance and lending companies drove over half of the deal value in Q1.
The largest deal in the region was a $280.9 million raise by China’s Yi’an Enterprise, followed by India’s KreditBee and Thailand’s Ascend, which raised $209 million and $195 million, respectively.
The report noted significant developments in digital currencies and real-world digital asset tokenization, with hubs like Hong Kong, Singapore, and Japan balancing innovation with regulation.
These jurisdictions are exploring ways to integrate traditional finance with decentralized finance.
Artificial intelligence (AI) remains a key focus for fintech investors and companies in the region.
Traditional financial institutions are increasingly using AI to improve operational efficiencies, while fintech firms are enhancing the AI components of their products, though many applications are still in early stages.
Andrew Huang, Head of Fintech at KPMG China, highlighted the growing use of AI-driven applications in China’s financial institutions. He said:
We expect continued growth in these activities during the second half of 2024, though it will take time for these applications to mature.
China’s central government is promoting support for startups in areas like technology and green finance as part of its Five Finance strategy, potentially driving more investments.
Despite regulatory uncertainties surrounding cryptocurrency in Mainland China, fintech remains a strong investment sector, particularly in crypto, consumer payment systems, and lending platforms.
Crypto investments are reinforced by blockchain’s designation as a strategic technological innovation in China’s 14th Five-Year Plan (2021-2025).