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Fintech fund inflows for ASEAN hit $5.7b; Singapore an ‘excellent bridge’ for investing firms: Report

Fintech fund inflows for ASEAN hit $5.7b; Singapore an ‘excellent bridge’ for investing firms: Report


Singapore has a conducive business environment supported by a sound technological and financial infrastructure.

Singapore has a conducive business environment supported by a sound technological and financial infrastructure.

Fintech investments in ASEAN soared to US$4.3 billion (S$5.7 billion) in the first nine months of 2022, surpassing the total value of all such investments in the region from 2018 to 2020 combined.

According to a report released on Friday by professional services firm PwC Singapore, the Singapore Fintech Association (SFA) and Singapore Economic Development Board (EDB), Southeast Asia as a whole remains a hotbed of opportunities for the financial tech industry, due to the region’s rapid urbanisation and its young and tech-savvy population.
 


In the midst of these developments, Singapore serves as an “excellent bridge” for companies to reach its neighbours in Southeast Asia, the report noted.

The Republic has a conducive business environment supported by a sound technological and financial infrastructure, which balances the risks involved with investing in emerging countries.

In 2022, a separate report by PwC Singapore, SFA and UOB found that Singapore and Indonesia accounted for more than three-quarters of ASEAN’s total funding in fintech that year. Singapore had the highest number of fintech firms within the ASEAN-6 (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam) – 1,580 as at November 2022.

On the global front, the current report said that challenges remain for the industry, especially at a time when macroeconomic headwinds and geopolitical tensions have dampened operations and led to mass layoffs. 

Investments in the global fintech industry fell to US$75.2 billion in 2022 from US$139.8 billion the previous year. However, the industry achieved a market value of over US$194.1 billion in 2022, and is projected to grow at a compound annual rate of 16.8 per cent between 2023 and 2028, when it could reach US$492.81 billion.

Payments continue to retain the pole position as the top performing fintech vertical, with the digital payments segment globally estimated to reach a total transaction value of US$9.47 trillion in 2023. The number of users is expected to reach 5.48 billion by 2024.

Meanwhile, the neobanking sector, which refers to digital-only platforms, is projected to have a revenue increase of 28.9 per cent worldwide. The average transaction value per user in 2023 is anticipated to reach US$18,000.

It is also estimated that 114 countries, accounting for over 95 per cent of global gross domestic product, have either launched or are considering launching central bank digital currencies (CBDCs) for both retail and wholesale purposes. This is up from 35 countries in 2020.

The Monetary Authority of Singapore launched Project Ubin+ last November to explore cross-border foreign exchange settlement using wholesale CBDCs.

According to the PwC-SFA-EDB report, there are three trends that will continue to shape the global fintech industry – artificial intelligence (AI), sustainability and digital trust.

Singapore has introduced a number of initiatives to support companies in these areas.

For example, AI Singapore, a national research and innovation programme, introduced the AI International Grant Call to offer grants for AI research through partnerships between Singapore and other countries.

The AI Verify Foundation, launched in June by the Infocomm Media Development Authority, is the world’s first AI governance testing framework and toolkit, which allows industry players to demonstrate their deployment of responsible AI.
 


The report also noted that the Singapore Government is actively working on the sustainability front.

Enterprise Singapore announced in 2021 that it had set aside $180 million for the Enterprise Sustainability Programme to help local companies develop sustainability capabilities so they can better seize opportunities in the green economy.

Singapore’s approach to fintech regulation is also “nimble and responsive”, the PwC-SFA-EDB report added, citing how the Payment Services Act was quickly expanded in 2021 to cover the scope of digital payment tokens and assets.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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