Fintech investments in Singapore soar to record highs; cross billion-Sing-dollar mark

The total value of fintech deals in the nine months ended September 30 jumped 69 percent from the prior-year period to US$735 million from US$435 million, an Accenture report said.

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Singapore city
Singapore city Reuters

Global investors pumped $735 million into financial-technology ventures in Singapore during the three quarters of the year, recording a 69 percent rise over the same period a year earlier. investments in payments startups and lending companies constituted the bulk of the fintech funds that came to Singapore, research firm Accenture said in a report.

With Singapore set to issue new digital banking licenses, the spurt in fintech investments in the island state has come at an opportune time. According to Bloomberg, the Singapore central bank said it plans to issue five new digital bank licenses to non-banks in the country. The move is aimed at strengthening competition in the financial services sector.

The total value of fintech deals in the nine months ended September 30 jumped 69 percent from the prior-year period to US$735 million from US$435 million, the Accenture report said. The fundraising also exceeded the US$642 million raised in all of 2018.

However, the number of fintech deals fell by almost one-third (29%) in the first nine months of 2019, to 94 from 133 in the prior-year period showing that investors made larger bets into fewer deals as startups grew their business, the report added.

The value of payments deals jumped 113%, to US$251 million, making the biggest contribution to the overall gains this year. Insurtech funding nearly quadrupled, to US$128 million from US$35 million, and lending rose more than 50%, to US$145 million.

Singapore Technologies Engineering
Singapore Technologies Engineering website

Angel and seed funding that focuses on the earliest stage of capital raising for startups just getting their business off the ground dropped 56%, to US$54 million.

"As we've seen in other parts of the world, fundraising is shifting to support the scaling up of challenger and collaborative fintech, which will cause lumpiness in some rounds as the market becomes more mature," Divyesh Vithlani, managing director at Accenture and head of Financial Services in the ASEAN region, said.

"This steady flow of funds shows investors' confidence in the future growth potential of the fintech industry in Singapore. The upcoming unveiling of virtual banking licenses will bring even more opportunities for fintech startups and traditional banks to partner and cooperate," Vithlani added.

Edges out US as the most competitive economy

Sopnendu Mohanty, chief fintech officer of the Monetary Authority of Singapore, said crossing the billion-Singapore-dollar investment threshold is recognition from investors around the world reveals the potential of Singapore's fintech ecosystem.

Singapore has avoided slipping into recession, the latest data release showed on Monday. According to data released by the Ministry of Trade and Industry (MTI) on Monday, the island state's economy expanded 0.1 percent on a year-on-year basis in the third quarter of 2019.

In another development last week, the World Economic Forum said last week Singapore edged out the United States as the world's most competitive economy. According to the "Global Competitiveness Report 2019," published by the World Economic Forum on Wednesday, the island state reached the top spot among 141 countries and regions.