How can Asia-Pacific fintechs survive this year’s funding slowdown?

Hong Kong could emerge as a bright spot.

Asia-Pacific fintech firms are heading into 2026 facing a cautious funding environment, with overseas expansion and bank partnerships emerging as key survival strategies.

Investors are expected to remain selective in the first half of the year amidst China’s economic slowdown and inflation concerns in Australia, according to a KPMG Services Pte. Ltd. report released in February.

Investment in China-based fintech companies dropped to $876.1m in 2025 from $991.7m a year earlier as persistent economic challenges, geopolitical tensions, and tighter regulations weighed on deal activity.

Against that backdrop, Chinese fintech firms are increasingly looking overseas. KPMG said companies are replicating domestic payment and microcredit models in overseas markets under a so-called “dual-market route” strategy, seeking growth beyond a softer home market.

In Australia, financial institutions are expected to deepen partnerships with fintech firms to drive efficiencies and reduce costs. Investment in Australian fintechs fell sharply to $609m in 2025 from $1.9b a year earlier.

“These kinds of consolidation deals almost always make sense because they create more longevity, profitability, and sustainability,” said Daniel Teper, a partner and head of fintech M&A at KPMG Australia.

Hong Kong could emerge as a relative bright spot this year. The city revamped its digital asset regulatory regime last year under a stablecoin ordinance, tightening oversight whilst offering clearer rules for issuers.

Whilst stricter requirements may prompt some players to exit, those that remain could benefit from stronger credibility. Analysts have said the framework could position Hong Kong as a gateway for regional digital currency initiatives.

KPMG also cited a pickup in fintech initial public offerings in Hong Kong, with more deals in the pipeline. However, it cautioned that exits are not necessarily expected to trigger a fresh wave of venture investment.

Across the region, funding slowed. Total Asia-Pacific fintech investment fell to $9.3b in 2025 across 763 deals, down from $11.7b across 1,028 deals a year earlier, according to the KPMG report.

The slowdown was evident earlier in the year. Southeast Asian fintech firms posted their weakest funding period since 2016 in the first nine months of 2025, with total funding declining 36% year on year to $835m, based on a separate report by PwC Singapore, United Overseas Bank, and the Singapore FinTech Association.

Questions to ponder:

• How are regulators in key markets like Singapore, Hong Kong, and Indonesia responding to fintech expansion?
• Which markets in Southeast Asia are attracting the most venture capital, and why?