singapore fintechs off to a flying start in 2021
TRANSCRIPT
2020 marked the fifth anniversary of Singapore’s bold move to create the world’s leading FinTech Festival. Today, Singapore is recognised as one of the world’s leading FinTech hubs.
Funding data shows homegrown FinTechs raised ~S$656M in equity funding in Q1 this year. This is 355% higher com-pared to Q1 of last year, and already amounts to ~46% of total funding raised in 2020. This large figure is in part driven by Grab Financial Group’s Series A round of over SG$417 million in January to continue building its Digital Financial Services.
Other large rounds include S$41 million Series B rounds in Xfers, a payment processing gateway designed to offer credit card processing and internet banking transfers, as well as imToken, a DLT-powered, decentralized digital wallet and exchange, and a S$23 million Series A round in Endowus, an MAS-licensed platform allowing users to invest their CPF and Supplementary Retirement Scheme (SRS) money as well as cash. Overall FinTechs operating in the business lines of Retail Banking, Capital Markets and Technology have gained the strongest funding traction in 2021 so far. (see Exhibit 1)
“We’re happy to see that Singapore Fintechs continue to attract increasing amounts of funding and we see this trend continuing even stronger in the future. The fertile ground created by the progressive Singapore regulators, as well as the network effect and collaborative ecosystem offers a unique envi-ronment for visionaries and entrepreneurs to build and grow their Fintech businesses out of Singapore, and SFA is working to provide even more sup-port in the journey.”
— Shadab Taiyabi, President of the Singapore Fintech Association
Singapore FinTechs off to a flying start in 2021 Raising over half a billion dollars in equity funding following a record year in
2020 and the approval of four digital bank licenses.
By Jason Han, Guglielmo De Stefano, Ian Loh and Pauline Wray
BOSTON CONSULTING GROUP 1
2 SINGAPORE FINTECHS OFF TO A FLYING START IN 2021
This stellar start to 2021 comes on the back of a re-cord-breaking year for FinTechs in Singapore. In 2020 (see Exhibit 2), FinTechs raised a resounding ~S$1.4 billion in equity funding, representing the highest annual amount
ever despite the outbreak of COVID-19. More impressively, this comes after 5 years of accelerated growth in equity funding for the local FinTech ecosystem, with a CAGR of 47% observed between 2016 and 2020.
Source: BCG FinTech Control Tower
Exhibit 1 - Equity funding amounts Q1 2020 vs Q1 2021, S$ million
58
484
47
24
10
80
8
24
8
45
145
660
Q1 2020 Q1 2021
+355%
Capital markets InsuranceWealth management
Support
Corporate banking
SME bankingTechnologyRetail banking
53 216 193 233
554 45 161 81
418
117 144 217
218
122 31
306
53
56
41
100
24
41
43
56
39 33
32
43
27
33
36
183
578 671
1,045
1,401
2016 2017 2018 2019 2020
+34%
~47%2016 -2020
CAGR
Capital markets InsuranceWealth management
Support
Corporate banking
SME bankingTechnologyRetail banking
Source: BCG FinTech Control Tower
Exhibit 2 - Equity funding amounts by business line, S$ million
BOSTON CONSULTING GROUP 3
The largest three rounds of 2020 (see Exhibit 3) include a S$396 million round in AMTD Digital, a Singapore subsidi-ary of investment banking firm AMTD Group which aims to connect a variety of Asian markets and create a one-stop digital solutions platform, an undisclosed Series C round in digital cross-border money transfer platform NIUM and a S$41.7 million Series C round in peer-to-peer lending platform Funding Societies.
“What we’ve seen in 2020 is the acceleration of existing trends in FinTech, which has been bolstered by significant increases in investment and capital available in the region in recent years. We were likely going to get to this point in FinTech adoption eventually, but necessity has forced change almost overnight in some areas. For example, in terms of how people purchase goods, lockdowns have forced the adoption of cashless payment options.
FinTechs were able to pivot and adapt quickly to deliver special-ized services that customers needed. As a result, investor interest has continued to be strong in FinTech companies..” – Amra Naidoo, co-founder and general partner of Accelerating Asia
In a strong sign that Singapore‘s FinTech ecosystem is gradually maturing, five Series C rounds were raised in 2020. This included for NIUM, Funding Societies, AI-pow-ered fraud prevention platform Advance.ai, digital wealth management platform StashAway and core banking plat-form MatchMove. Hailing from a range of business lines, this demonstrates the rich diversity of FinTechs which are flourishing in Singapore.
Mr Sopnendu Mohanty, Chief FinTech Officer of the Monetary Authority of Singapore, said, “The record investment in the FinTech sector in 2020 demonstrates the depth and growing maturity of Singapore’s FinTech ecosystem. Despite the challeng-es brought about by COVID-19, the FinTech sector, with the support from various resiliency programs, leveraged the fast-growing digital shift of the Asian economy to anchor itself on a sustainable path of growth.”
Exhibit 3 - Equity funding amounts by business line in 2020-20211, S$ million
Source: BCG FinTech Control Tower
Note: The logos represent selected examples of FinTechs with large fundraising rounds in the relevant month.1As of Jan 31st, 2021.
Capital markets InsuranceWealth management
Support
Corporate banking
SME bankingTechnologyRetail banking
425
43 72 149
56 28
86
44
84
27
428 24
26
26
69
62 41 42 98
237
143
33 54
548
47 67 31
503
Jan ‘20 Feb ‘20 Mar ‘20 Apr ‘20 May ‘20 Jun ‘20 Jul ‘20 Aug ‘20 Sep ‘20 Oct ‘20 Nov ‘20 Dec ‘20 Jan ‘21
4 SINGAPORE FINTECHS OFF TO A FLYING START IN 2021
Bank Account Penetration (age 15++) (%)
Bank Account Usage in 2019 (%)
Financial inclusion on the rise in SEA with more people entering the banking system
9766 72
20 22 27
96 80 7837 32 32
96 85 8149
32 35
Singapore Malaysia IndonesiaThailand PhillipinesVietnam20172011 2014
97 85 8250 32 35
6739 40 23 2317 16 19 19 11
IndonesiaThailandSingapore PhillipinesMalaysia Vietnam
14 14
Borrowed at a Financial Institution %Account Penetration % Save at a Financial Institution %
Usage of bank accounts remains low but increasing rapidly
In addition, 2020 registered a number of FinTech M&A deals, such as:
• AMTD Digital’s three strategic acquisitions of block-chain-powered price comparison app PolicyPal in March 2020, QR-powered digital payment service provider FomoPay in July 2020 and blockchain-powered primary issuance platform CapBridge in June 2020;
• Grab’s acqusition of Bento, a B2B robo-advisor and digital wealth technology provider, bringing retail wealth management and investment solutions to its ecosystem of users; and
• Full stack digital life insurer Singlife’s acquisition of ~75% of Aviva Singapore; by joining forces, the two com-panies aim to build a strong brand, combining Singlife’s technology with Aviva’s industry experience.
“2020 has proven that Singapore has succeeded in being recog-nized by investors as well as entrepreneurs as a global FinTech hub with a vibrant sustainable ecosystem.” – Melissa Guzy, Co-Founder and Managing Partner of Arbor Ventures
The FinTech scene in Singapore is set to grow from strength to strength, as it welcomes a new era of digital banking. Singapore recently became the first country in Southeast Asia to issue digital banking licenses, with the aim of harnessing new technologies to improve financial inclusion, drive innovation and encourage competition.
The announcement attracted strong interest in these licenses, with 21 applications submitted featuring consor-tiums of established firms from across financial services, telecommunications, e-commerce, and other industries. Four license winners were announced at the end of 2020:
• Two Digital Full Bank licenses to a Grab-Singtel tie-up and consumer internet company Sea
• Two Digital Wholesale bank licenses to China’s Ant Group and a consortium comprising Greenland Finan-cial Holdings, Linklogis Hong Kong, and Beijing Co-oper-ative Equity Investment Fund Management
All eyes will be on these players as they set their sights on capturing the large share of unbanked digital savy custom-ers in the wider region. (see Exhibit 4)
“International players view Singapore as a strategic gateway to the region due to the availability of capital, favorable business environment, strong technology and banking talent pool, and a robust licensing application and vetting process which provides successful applicants with a credibility “brand premium”.
While the Singapore market alone is relatively small, the large underbanked and unbanked population in the region is a huge opportunity. With an emerging middle class and a young and digitally engaged demographic, neighboring countries are attrac-tive markets for digital services.” – Pauline Wray from BCG FinTech Control Tower
Source: IMF, BCG Analysis, BCG FinTech Control Tower, Singapore FinTech Association
Exhibit 4 - Tremendous opportunity to serve the unbanked and under-banked across the Southeast Asia region
BOSTON CONSULTING GROUP 5
“For a business like Tyme that is focused on digital banking in South East Asia, Singapore is the perfect home base. In our recent fundraise of US$110m, we were delighted to see the enthusiasm for Singapore from all of our investors. The regulato-ry environment and many benefits the Singapore government offers to FinTechs is creating an ecosystem of players here in Singapore that drew us to the city.” – Coen Jonker, Executive Chairman of Tyme
Adding to this momentum is the MAS announcement* on 30 April 2021 committing S$42 million towards a RegTech grant scheme, while enhancing the Digital Acceleration Grant Scheme (DAG).
• A two track RegTech grant scheme:
• Under the pilot track, FIs can seek funding to pilot potential RegTech solutions before embarking on full-scale integration of the product into its operating environment. Funding for this track will be capped at S$75,000
• Under the production level project track, FIs can seek funding to develop larger scale customised proj-ects that can be fully integrated into the FI’s sys-tems. Funding for such projects will be capped at S$300,000”
• An additional funding of $30 million for the existing Dig-ital Acceleration Grant scheme (DAG), to encourage the industry to adopt digital solutions that enhance produc-tivity, cyber security, and operational efficiency
“The RegTech grant scheme will ensure a thriving RegTech ecosys-tem not just from a supply side but also from the demand side. Despite COVID-19, RegTechs have had significant success with fundraising and are achieving scale. A virtuous cycle of mutual enablement is happening across an ecosystem of RegTechs, Banks, Insurers, FinTechs and Supervisors. The explosion of data, continued digitalization and the rising complexity of regulation and cost of compliance are amongst the key drivers for organiza-tions using RegTechs to more efficiently and effectively carry out Risk, Compliance and even Supervisory duties. Singapore rises firmly to the challenges of the digital age by supporting the proliferation of such start-ups.” – Pauline Wray, Co-Head BCG FinTech Control Tower
1. Mega rounds defined as >USD100m 2. CAGR = Compound Annual Growth Rate
Source: BCG FinTech Control Tower
Exhibit 5 - Despite COVID19 uncertainty, ‘20H1 investments grew by a further 16% on top of record funding in ‘19H2
https://www.mas.gov.sg/news/media-releases/2021/mas-commits-42m-to-spur-adoption-of-technology-solutions
Risk Analysis - 72%
Data Compliance Management +729%
Implementation & Governance - 60%
Monitoring +105%
Verification +415%
Reporting - 14%
Regulatory Analysis -
RegTech cluster CAGR ‘19H1 –‘20H1Equity funding by cluster, ($M)
87155
81 109 132 99
288
513
2017 18 20
1560 23
17 11 11
26
11
110
177
114 99113
284
98 158
448
323
11 144 158
11
215
349
33
3
2015H2
25
17
41
2015H1 2018H1
40
19
2019H226
2018H22016H1
394
18
25
2017H1 2019H1
37
20
38
177
2020H128
32
2016H2
19135
42
1,054
2017H2
348
193271
495
302356
1,227+196%
+16%
Verification
Data Compliance Management
Monitoring
Implementation & Governance
Reporting
Regulatory Analysis
Risk Analysis
6 SINGAPORE FINTECHS OFF TO A FLYING START IN 2021
BCG FinTech Control Tower worked closely with the Mone-tary Authority of Singapore to analyse Fintech equity funding data from Crunchbase, Dealroom, Venture Capital Insights and interviews with FinTechs and VCs. FinTech companies are defined as those that offer financial services directly or provide enabling technologies to financial institutions, facili-tating the provisioning of financial services.
Methodology
About the AuthorsPauline Wray is the Global lead of the BCG Expand FinTech Control Tower, and the Head of BCG Expand in Asia.
Ian Loh is a Principal with BCG Expand FinTech Control Tower based in the Singapore office. He leads the research team
Guglielmo De Stefano is a Lead Analyst with BCG Ex-pand FinTech Control Tower. He has led multiple global studies on FinTechs and InsurTechs.
Jason Han is an Analyst with BCG Expand FinTech Control Tower. Prior, he worked in management consulting and at a FinTech startup
For Further Contact
If you would like to discuss this report, please contact the authors.
BCG FinTech Control Tower (FCT) is a research-focused unit developed jointly by the Boston Consulting Group (BCG) and Expand Research. The FCT identifies initiatives, technologies, and companies that matter most in today’s FinTech ecosystem and assesses their impact. We engage directly with financial institutions, regulators, industry stakeholders and innovators via bespoke consulting services, deep-dive industry reports as well as a self-service FinTech intelligence platform which will launch shortly. Through gathering data on FinTechs via data providers and primary interviews, we map players based on a proprietary taxonomy based on their businesses, product offerings and more. For more information, visit us at www.fintechcontroltower.bcg.com
* Note: An exchange rate of $1.39 USD/ SGD has been applied for all numbers presented in this article.
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