Singapore is also the launchpad for FinTech firms looking to move across ASEAN
Financial technology (FinTech) firms in Singapore continued to attract the lion’s share of global funding among ASEAN countries, receiving more than half (51 per cent) of funding for the region according to the FinTech in ASEAN: From Start-up to Scale-up report. Released by United Overseas Bank (UOB), PwC and the Singapore FinTech Association (SFA), the report also found that Singapore tops the region as the preferred base of FinTech firms and is home to 45 per cent of all FinTech firms in ASEAN.
Testament to the country’s push to encourage FinTech innovation across a broad range of areas, funding for Singapore-based FinTech firms was the most evenly distributed, with insurance technology, payments and personal finance leading the way. According to the report, the diversified funding also indicates the country’s more mature FinTech landscape, compared with other ASEAN markets where the FinTech sector is still nascent and is largely focused on payment-related solutions.
Ms Janet Young, Head, Group Channels and Digitalisation, UOB, said, “Singapore’s favourable regulatory and business environment, strong investor interest and maturing FinTech sector continue to make it an attractive base for firms that are looking to tap ASEAN’s growth potential. As such, more firms in the country have also graduated from pre-series to later-stage funding
“However, expanding into and within one of the world’s most diverse regions is not plain sailing. Therefore, in order to increase their chances of success, it is important for FinTech firms to find the right partner to supplement the experience, insights and connections required to navigate the differing regulatory frameworks and operating landscape across ASEAN.”
Stamina, realistic valuations and talent enable successful expansion across ASEAN
Businesses were the main target customer segment for FinTech firms (79 per cent). Among businesses, financial institutions made up half (50 per cent) of the target segment, followed by corporates (17 per cent) and small- and medium-sized enterprises (12 per cent). Consumers and start-ups made up the rest of the target segment (21 per cent).
As most financial institutions and corporates tend to require multi-level approvals across different stakeholders, FinTech firms need to be prepared for a longer lead time before sealing the deal and onboarding these clients. FinTech firms offering business-to-business solutions should therefore ensure that they have a longer funding runway to meet their operating expenses.
The report also found that FinTech firms in ASEAN are generally optimistic about their current and future funding needs, with almost half of those surveyed confident of raising more than US$10 million for their next funding round.
Ms Wong Wanyi, FinTech Leader, PwC Singapore, said, “This optimism is not surprising, given the promise that the ASEAN region brings and the liberation of the industry through digital banking licenses. The increasing penetration of mobile devices coupled with the capabilities of new innovative technologies have made FinTech firms a key driver in this evolving ASEAN financial services landscape, providing an experience that is easier, faster and more convenient. That being said, the FinTech scene is very competitive so FinTech firms should be focused and have a clear value proposition. Scaling up should be at the right pace and for the right reason.”
Talent remains a challenge, with 58 per cent of FinTech firms surveyed indicating that this was an inhibitor to their regional expansion plans.
Mr Chia Hock Lai, President, SFA, said, “FinTech firms need to consider if there is suitable and abundant expertise at the location they have chosen to scale their business. Given the long time it takes to hire the right talent, firms must plan ahead when it comes to expanding their workforce and business in a new market. One way that some firms overcome this challenge is to hire local talents at least six months ahead of their expansion into a new market.”
The FinTech in ASEAN: From Start-up to Scale-up report can be downloaded by visiting: www.uob.com/fintech2019.
