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The market intelligence platform said that Southeast Asia remains a prominent hub for fintech investments, accounting for 14.5 per cent of the total sector funding across Asia.

Singapore ranked third in the region in terms of fintech investment, further establishing itself as a major player in this space.

While the Southeast Asia fintech ecosystem experienced its peak funding in the third quarter of 2021, a steady decline has persisted since, despite a brief recovery in the fourth quarter of 2023.

The third quarter saw a funding drop to $322 million, a 28 per cent decrease compared to the $447.5 million raised in the previous quarter.

However, when compared year-on-year, this marks an 8 per cent rise from $299 million in the third quarter of 2023.

"The fintech landscape in Southeast Asia continues to be dynamic despite ongoing macroeconomic challenges. Although late-stage funding has taken a hit, it’s encouraging to see early-stage investments showing resilience. The region’s large consumer base and rapidly growing digital economy provide strong growth opportunities in the long term," said Neha Singh, CEO and co-founder of Tracxn.

According to Tracxn, early-stage and seed funding in the region remained bright spots in the third quarter of 2024.

Early-stage funding increased by 32 per cent to $196 million from the previous quarter’s $148 million, while seed-stage funding rose by 40 per cent, reaching $52 million from $37.5 million in the second quarter of 2024.

Late-stage funding, however, witnessed a steep 72 per cent decline, dropping to $73 million in the third quarter of 2024, down from $263 million in the second quarter of 2024.

None of the fintech startups managed to secure funding rounds exceeding $100 million in the third quarter, signalling challenges for more mature companies seeking large capital injections.

Despite the overall decline, payments, banking tech, and forex tech remained the top-performing segments in the fintech space.

The payments segment raised $123 million in the third quarter of 2024, although this was 44 per cent lower than the $223 million raised in the second quarter of 2024.

Banking tech saw a significant surge, raising $80 million compared to just $6 million in the previous quarter, while forex tech garnered $60 million, marking a substantial improvement.

The third quarter saw no new unicorns or initial public offerings (IPOs) in the Southeast Asia fintech space. There have been no IPOs in this sector in 2024.

However, the number of acquisitions rose to seven in the third quarter of 2024, up from five in the second quarter of 2024, reflecting ongoing consolidation in the region.

Among cities, Singapore led with $157.7 million in funding raised during the third quarter of 2024, followed by Jakarta with $103.2 million.

"While the immediate outlook remains cautious, the overall optimism in Southeast Asia’s fintech sector continues to be bolstered by favourable long-term factors. Government initiatives, wide internet penetration, and a thriving digital economy will be crucial drivers of future growth," Singh added.