Singapore keeps top spot in Asean fintech funding with $2.2b in deals

Singapore retained its top spot in the Asean region for the number of deals made by financial technology firms to secure funding, with firms securing a total of US$1.6 billion (S$2.2 billion) in investments and almost half of the 167 deals made in the first nine months of 2021, a report by UOB, PwC Singapore and the Singapore FinTech Association (SFA) said yesterday.

This includes six mega-rounds - those which raise US$100 million and above - worth US$972 million in total.

Indonesia stayed in second place, raking in US$904 million in funding (26 per cent), followed by Vietnam which rebounded sharply to US$375 million in funding (11 per cent) as a result of two mega-rounds.

Financial technology funding in the Asean region more than tripled from last year to hit a record US$3.5 billion in the first nine months of the year, as investors poured money into mature firms seen as having a higher chance of emerging stronger from the pandemic.

The rebound in fintech investments comes after total funding dipped from US$1.6 billion in 2019 to US$1.1 billion last year - when the Covid-19 outbreak likely dampened investor confidence.

However, growth in the region's number of fintech firms slowed as the industry continued to mature and late-stage firms attracted more investor dollars. There were 107 new firms this year, down from 278 last year and 411 in 2019. Most investors showed strong interest in late-stage fintech firms, which secured 10 out of 13 mega-rounds this year.

"This trend signals a shift in the strategy of investors across several Asean markets as they take a more cautious and risk-adverse approach of backing mature firms that are seen as standing a higher chance of emerging stronger from the pandemic," said the report.

The highest amount of funds went into late-stage fintech firms from the payments sector amid the growing adoption of digital payments in the region. Funds injected into investment tech and cryptocurrency firms in Asean saw the strongest growth this year, taking investment tech to second place and crypto to third, after payments.

This year is also the first time in six years that alternative lending - loans not made by traditional financial institutions - was edged out of the top three most-funded categories, due to growing interest in digital investments and digital currencies.

Funding for investment tech firms hit US$457 million, up from just US$77 million last year.

Six out of 10 Asean consumers have used digital tools like robo-advisers and online brokerage platforms to invest, according to a UOB, PwC and SFA survey in September of more than 3,000 respondents in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Meanwhile, cryptocurrency firms raked in US$356 million, up from US$68 million last year.

The survey found that nine in 10 Asean consumers have started or plan to use cryptocurrencies and central bank digital currencies, and the share of cryptocurrency firms in the region out of total fintech players is expected to grow.

Payments continued to take the lion's share, US$1.9 billion, and accounted for the majority of fintech firms in most countries.

The exceptions are Singapore, where cryptocurrency firms make up a quarter of fintech players, and Thailand, where alternative lending players account for 21 per cent.

Funding of payments firms will accelerate the use of e-wallets, debit and credit cards and mobile banking apps, which are already the most popular payment methods after cash, said the study.