PitchBook has released its report, entitled Q4 2024 Exploring APAC’s Fintech Pathways: Part II: Southeast Asia.
PitchBook has shared a deep dive into Southeast Asia’s fast-evolving fintech developments by navigating regional market nuances.
According to the research study, the APAC region has many relatively strong fintech ecosystems, driven by various macro trends such as the fast-growing economies, rising middle classes, and fairly large “underbanked populations seeking access to financial services.”
The PitchBook report also noted that region now has many “homegrown fintech companies” capitalizing or looking to take advantage of large market opportunities in banking, payments, credit, and wealthtech.
The research study from PitchBook pointed out that local giants, such as Ant Group, Airwallex, and Grab, currently hold significant “share in their markets and are expanding globally.”
But scaling across the fragmented APAC region remains “a challenge due to regulatory differences and market diversity.”
Similar to the “broader” fintech market, the APAC fintech market has “had a
normalization in deal activity following 2021’s high of $16.1 billion in VC deal
value.”
In H1 2024, APAC fintech companies have reportedly “secured $2.3 billion in venture capital, down 34.1% from $3.4 billion in the prior-year period.”
They have reportedly “recorded 186 VC deals in H1 2024, compared with 238 in H1 2023.”
Between 2018 and H1 2024, the majority of fintech VC in APAC was captured
by China, Southeast Asia, and India.
The report from PitchBook also stated that China has “secured the largest share with $31.2 billion, accounting for 33.2% of the total APAC fintech VC deal value. Southeast Asia closely followed with $26.7 billion and 28.4% of all APAC fintech VC deal value, while India attracted $25.1 billion, representing 26.6% of the region’s deal value.”
The report from PitchBook further revealed that venture-growth fintech deals in APAC have steadily increased “since 2018, growing from 3% to 11.3% of all VC deals by H1 2024.”
But early-stage deal activity has “declined sharply, with pre-seed/seed deals making up just 19.9% of total deals, likely due to dried liquidity.”
The report from PitchBook also mentioned that “geopolitical tensions,” particularly US-China conflicts, are now challenging fintech expansion in APAC.
Capital is being reallocated from China to other regional markets “due to uncertainty about Beijing’s support for foreign investment.”
Additionally, the research study from PitchBook explained that restrictions like India’s ban on Chinese apps tend to complicate cross-border efforts for Chinese fintech companies, emphasizing the “need for startups to remain politically neutral and navigate these regional sensitivities to scale effectively across diverse APAC markets.”
Over the past few years, the PitchBook research report pointed out that Southeast Asia has not been “immune to the global venture market slowdown.”
Nonetheless, the research report stated that fintech development in the region is “propelled by a host of tailwinds.”
The PitchBook report added that robust demographics as well as a growing middleclass population speak to opportunities in the financial services sector, including in the following key areas: payments, credit, as well as professional wealth management services.
In addition, across the region, governments have increasingly been pushing for a transition toward cashless payments.
