FinTech funding in Asean has more than tripled to a record high of US$3.5 billion ($4.36 billion) in the 9M2021, compared to the FY2020, 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 mega-rounds, which accounted for US$2 billion of the total funding.
A mega-round is defined as a funding round of US$100 million and above.
According to the report, most investors showed strong interest in late-stage FinTech firms, which secured 10 out of 13 mega-rounds in 2021.
Late-stage firms are defined as those being in the Series C round of fundings and above.
This trend has seen investors taking a more cautious and risk-adverse approach of backing mature firms that are seen as standing a higher chance of emerging stronger from the Covid-19 pandemic.
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On the back of the growing adoption of digital payments in Asean, investors have injected the highest amount of funds into late-stage FinTech firms from the payments sector at US$1.9 billion.
Funds injected into investment tech and cryptocurrency firms in Asean saw the second and third highest amount of funds being injected respectively.
As such, the investment tech and cryptocurrency firms also logged the strongest growth in 2021.
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This is also the first time in six years that alternative lending has been edged out of the top three spots in terms of funding.
Compared with 2020, funding for investment tech firms grew six times to US$457 million in 2021. This is in line with growing consumer interest in the use of digital trading and wealth management tools, noted the report.
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According to a survey conducted by UOB, PwC and SFA, 60% of Asean consumers have used digital tools such as robo-advisors and online brokerage platforms for their investment needs.
The survey was conducted in September among 3,086 respondents aged 18 to 55 and above. This was done across Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam.
Funding for cryptocurrency firms stood at US$356 million, five times higher than that in 2020.
The share of cryptocurrency firms is expected to grow as players tap into consumers’ rising interest. As it is, 90% of Asean consumers have started or plan to use cryptocurrencies and central bank digital currencies.
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Singapore-based firms retain top spot in FinTech funding
Among the Asean nations, Singapore-based FinTech firms have continued to attract the strongest funding among investors.
The country has secured 49% of the total 167 deals amounting to US$1.6 billion in funding. This includes six mega-rounds worth US$972 million in total.
Indonesia took second place in 2021, bringing in US$904 million in funding, or 26% of the total amount.
Vietnam came in third, with 11% of the funding at US$375 million due to two mega-rounds.
FinTech firms in these three countries received funding in almost every category, which indicates a vibrant and growing industry with an active investment scene.
The categories here include banking tech, blockchain in financial services, cryptocurrencies and finance and accounting tech.
“The revival of investments in Asean’s FinTech industry has seen funding break through US$3.5 billion this year. Looking beyond this strong rebound, the opportunity to forge strong win-win-win partnerships between incumbent banks, FinTech firms and ecosystem platform players and expanding across the region will remain instrumental in propelling the sustainable growth of Asean’s FinTech firms,” says Janet Young, head of group channels and digitalization at UOB.
“We are heartened that the FinTech scene across Southeast Asia continues to thrive and grow at a rapid pace, as attested by the strong rebound in financing this year. One key driver of this resurgence was the pandemic, which has catalysed digital adoption in Singapore and across the region, driving the rise in digital payments and accelerating the shift towards digital channels within the financial services sector,” says Shadab Taiyabi, president at SFA.
“Singapore, in particular, has seen the most robust funding, supported by a growing number of FinTechs looking to set up their headquarters here due to the strong regulatory support, opportunities for regional collaboration and a flourishing startup-focused investor ecosystem. SFA remains committed to supporting and facilitating the FinTech ecosystem to foster new opportunities for companies to collaborate, connect and co-create,” he adds.
Wanyi Wong, FinTech leader, PwC Singapore says, “Companies that have embraced FinTech are reshaping the marketplace. With digital payments becoming the norm, and areas such as wealthtech and crypto assets fast gaining interest, our research findings are indicative that consumers in Asean have come to embrace a wide range of FinTech solutions along with the digital experience, and that they are ready to take on the digital future.”
“The question is no longer whether FinTech will transform the business landscape, but how to best adopt and embed a FinTech-centered strategy, underlined with inclusion, trust, transparency and accountability, to emerge as market leaders.”
Photo: Bloomberg
