A woman walks along the promenade at Marina Bay in Singapore on Oct 13, 2023. (PHOTO / AFP)

SINGAPORE - Singapore's fintech sector amassed total funding of $2.2 billion in 2023, a 68 percent decline compared to 2022, according to a report issued by accountancy giant KPMG Tuesday.

Deal activity also saw a sharp drop, halving to 189 in 2023 from the previous year, the report said.

Total investment in Singapore's AI sector exceeded $480 million across 2023, including over $330 million in the second half, up 77 percent from the first six months

The dampened investor sentiment can be attributed to geopolitical conflicts, a high-interest rate environment, and a lackluster exit environment across regions, which prompted fintech investors to exercise caution and conserve their cash reserves throughout 2023, according to the report.

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However, investors were optimistic about artificial intelligence (AI) performance. Total investment in Singapore's AI sector exceeded $480 million across 2023, including over $330 million in the second half, up 77 percent from the first six months.

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"While 2023 was a depressed year for the fintech market overall, Proptech, ESG fintech, and investors embraced AI-focused fintechs that helped particularly in the last six months," said Anton Ruddenklau, Global Head Fintech and Innovation, Financial Services, KPMG International.