DESPITE a global downturn, South-east Asia’s fintech sector has shown remarkable resilience, with funding in the region’s six largest economies dipping by less than 1 per cent in 2024 – a stark contrast to the 28 per cent decline in global fintech funding over the same period.
This marks a significant improvement from the 71 per cent drop recorded in the previous year in the six largest Asean economies – Singapore, Thailand, Indonesia, the Philippines, Vietnam, and Malaysia – with funding this year largely concentrated in early-stage startups and payments.
In comparison, global fintech funding declined 28 per cent in the first three quarters of 2024, trending down for the third consecutive year, according to the Fintech in Asean 2024 report: A decade of innovation. It was jointly launched by UOB, PwC Singapore and the Singapore FinTech Association (SFA).
Based on data from Tracxn’s platform, the report said that early-stage companies received more than 60 per cent of the total fintech funding of US$1.41 billion in the region, which went to half of the top 10 funded companies in the first nine months of 2024.
Primarily boosted by two mega deals from GuildFi (US$140 million) and Longbridge (US$100 million), this suggests investors may be willing to bet on innovation at the foundational level for potential future returns.
“Such a momentum may bode well for the long-term adaptability of Asean’s fintech landscape, as fresh ideas continually get backed,” added the report.
Over the last decade, fintech funding in the region has grown significantly, surging by more than 10 times since 2015, and recording a peak of nearly US$6.4 billion in 2021.
Janet Young, UOB’s managing director and group head of channels and digitalisation, as well as strategic communications and brand, said that fintechs have evolved from a disruptive force to become an essential component of financial ecosystems.
She noted that the region’s fintech sector “continues to show promise”, supported by an improving macroenvironment and the emergence of advanced technologies.
Singapore – leader of the pack
Zooming in on Singapore, Shadab Taiyabi, president of SFA, said: “The fintech ecosystem in Singapore continues to attract robust funding, driven by strong regulatory support and opportunities for cross-border collaboration.”
A total of 62 deals were inked in Singapore, comprising about 62 per cent of the total deal volume of 99 recorded for the six Asean economies for the first nine months of 2024.
In terms of deal value, Singapore bagged 53 per cent, or US$745 million, snaring the lion’s share in Asean for the 10th consecutive year.
Since 2015, the city-state has housed the most fintech unicorns in the region, with six of such firms valued at over US$1 billion, including Advance Intelligence Group – the parent company of buy-now-pay-later platform Atome; and cross-border payments firm Nium.
Meanwhile, Thailand rose to second place, ahead of last year’s runner-up Indonesia, with 24 per cent, or US$341 million of funding in the region for 9M 2024.
Indonesia fell to third place with 18 per cent of funding in the region for 9M 2024, as fewer large-scale investments resulted in a reduction in its share of the funding pie.
Among the nine categories of fintechs surveyed in the report, payments led funding numbers for 9M 2024, attracting 23 per cent of total fintech funding in the region, a 12 percentage point increase from 2023.
Blockchain in financial services came in second at 21 per cent, increasing by 19 percentage points from 2023. In third place was banking tech at 19 per cent, up 11 percentage points from 2023.
Alternative lending – which led funding numbers last year – faced a 31-percentage-point drop in funding share to 10 per cent, as high interest rates continued to weigh down the lending business.
The fintech industry is likely to benefit from the US Federal Reserve’s rate cuts. “Lower interest rates typically lead to cheaper funding, greater investor appetite from venture capital and higher valuations, ultimately improving exit opportunities,” the report indicated.
Wong Wanyi, fintech leader at PwC Singapore, said that “the growing impact of quantum computing and generative artificial intelligence (GenAI) will continue to push new frontiers in financial services, offering faster, more secure and intelligent solutions”.
The report indicated that GenAI can significantly enhance customer experience with innovative personalised financial advice and products, as well as improved fraud detection and risk management; while quantum computing can transform the fintech sector in areas such as optimising investment strategies.
Source: The Business Times
Link: Here
November 22, 2024
