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Fintech Funding in ASEAN Scores a Record US$3.5 Billion

December 02, 2021
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Financial technology (Fintech) funding in ASEAN increased rapidly in 2021, more than tripling in the first nine months of 2021 compared to 2020 to a record high of US$3.5 billion.

According to the FinTech in ASEAN 2021 report by UOB, PwC Singapore and the Singapore FinTech Association (SFA), the rebound in Fintech funding was driven by 167 deals including 13 major rounds, which accounted for US$2 billion of total funding.

Most investors show strong interest in late-stage Fintech companies and are committed to supporting 10 of the 13 mega rounds or big rounds this year.

This trend signals a shift in investor strategy in several countries in ASEAN as they take a more cautious and risk-averse approach in favor of companies that are already established and are seen as having a greater chance to rise and become stronger from the pandemic.

With the increasing use of digital payments in ASEAN, investors are placing their trust in the late-stage Fintech of the payments sector and are also injecting the highest amount of funds into these Fintech companies.

Janet Young, Head of Group Channels and Digitalization at UOB said that the revival of investment in the Fintech industry in ASEAN has driven up to US$3.5 billion in funding this year.

Seeing the strong rebound, he explained, the opportunity to forge win-win-win partnerships between the banking industry, Fintech companies and ecosystem platform players and expansion throughout the region will continue to play a role in driving the sustainable growth of ASEAN Fintech companies.

“At UOB, we have long collaborated with Fintech partners in driving their growth thanks to our deep understanding of the cultural, business and regulatory nuances of ASEAN and by connecting them to our regional ecosystem,” he explained.

This close collaboration, he continued, also enables UOB to leverage each other's unique strengths and capabilities to create progressive financial solutions and seamless digital experiences that benefit UOB's growing virtual world of customers.

 

Top Singapore


In the report, Singapore-based Fintech firms continue to attract the strongest funding in ASEAN and control nearly half (49 percent) of a total of 167 deals worth US$1.6 billion in funding. This includes six mega rounds totaling US$972 million.

This year, Indonesia maintained its second position with US$904 million (26 percent) in funding, followed by Vietnam which jumped sharply to US$375 million in funding (11 percent) as a result of two major rounds.

Fintech companies in Singapore and Indonesia receive funding in almost every category, a sign of a dynamic and growing industry with an active investment scene.

SFA President, Shadab Taiyabi, stated that he is pleased that Fintech in Southeast Asia continues to develop and grow rapidly, as evidenced by the strong rebound in financing this year.

One of the main drivers of this revival is the pandemic which has accelerated digital adoption in Singapore and across the region, as well as boosting digital payments and accelerating the shift to digital channels in the financial services sector.

“In particular, Singapore has recorded the strongest funding as it is supported by a growing number of Fintechs looking to establish their headquarters in the country thanks to strong regulatory support, opportunities for collaboration at the regional level, and an investor ecosystem focused on startups. which continues to grow.”

According to him, SFA remains committed to supporting and facilitating the Fintech ecosystem to encourage new opportunities for companies to collaborate, connect and create together.

Cryptocurrency Funding


Funds injected into investment technology and cryptocurrency companies in ASEAN experienced the strongest growth this year and brought both categories to second and third place after payments. It is also the first time in six years that alternative loans have dropped out of the top three spots in terms of funding as interest in digital investments and digital currencies has grown among customers.

Compared to 2020, this year funding for investment technology companies grew sixfold to US$457 million. This is in line with the increasing consumer interest in the use of digital trading tools and wealth management.

According to a survey conducted by UOB, PwC and SFA, six in 10 ASEAN consumers have used digital tools such as robo-advisors and online brokerage platforms for their investment needs.

Funding for cryptocurrency companies came in third with $356 million as the companies withdrew five times the funding they received in 2020.

Given that nine out of 10 ASEAN consumers have started or plan to use cryptocurrencies and central bank digital currencies, the share of cryptocurrency companies in the region is expected to grow as players capitalize on increasing consumer interest.

Payments remain the most funded Fintech category in ASEAN this year, amounting to US$1.9 billion and continue to be the majority of Fintech companies in most countries, except for Singapore (cryptocurrency) and Thailand (alternative lending).

Funding to these companies will accelerate the use of e-wallet, debit and credit cards, as well as mobile banking applications which are already the most popular payment method among ASEAN consumers after cash.

Wanyi Wong, FinTech Leader, PwC Singapore said companies that have embraced Fintech are reshaping the market. As digital payments are now the norm, and areas such as wealth technology and crypto assets are rapidly gaining popularity, the findings from his research show that consumers in ASEAN have embraced various Fintech solutions along with digital experiences and they are ready to face the future with their digital world.

“The question is no longer whether Fintech will change the business landscape, but what is the best way to adopt and embed a Fintech-centric strategy based on inclusion, trust, transparency and accountability so that it can emerge as a market leader.”