ASEAN, Singapore fintech funding surges; demand for talent outpaces local supply

fintech funding ASEAN

Fintech funding in ASEAN rebounded strongly in the first nine months of 2021, with Singapore-based firms continuing to attract most funding, according to the FinTech in ASEAN 2021 report.

The report, by United Overseas Bank (UOB), PwC Singapore and the Singapore FinTech Association (SFA), found ASEAN fintech funding was three times higher in the first nine months of 2021 compared with full year 2020, hitting a record high of US$3.5 billion.

UOB said in a statement there were 167 fintech deals across ASEAN, including 13 mega-rounds which accounted for US$2 billion of the total funding.

Singapore retained top spot in the region with US$1.6 billion in funding, accounting for 49 per cent of the total 167 deals, including six mega-rounds worth US$972 million.

Indonesia was second with US$904 million in funding, followed by Vietnam with US$375 million as a result of two mega-rounds.

Most ASEAN investors went for late-stage fintechs, particularly in payments, which was the most funded category this year at US$1.9 billion. UOB said this reflected both the growing adoption of digital payments in the region and a more cautious approach in backing mature firms which had a higher chance of growth post-pandemic.

SFA President Shadab Taiyabi said the fintech scene continues to thrive and grow at a rapid pace.

“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,” he said in a statement.

In the various fintech categories, investment tech and cryptocurrency firms saw the strongest growth in ASEAN.

Growing consumer interest in digital trading and wealth management tools saw funding for investment tech firms six times greater at US$457 million this year compared to 2020. A survey by UOB, PwC and SFA found six out of 10 ASEAN consumers have used digital tools such as robo-advisers and online brokerage platforms for their investment needs.

Funding for cryptocurrency firms came in third at US$356 million, five times that of 2020, reflecting the survey results that nine in 10 ASEAN consumers have started, or plan to use, digital currencies.

“The question is no longer whether fintech will transform the business landscape, but how to best adopt and embed a fintech-centred strategy, underlined with inclusion, trust, transparency and accountability, to emerge as market leaders,” said Wanyi Wong, FinTech Leader at PwC Singapore.

Separately, the SFA and Accenture Singapore launched the 2021 Fintech Talent report, which said there was an urgent need for fintech know-how among companies with a Singapore presence.

Almost three-quarters of companies surveyed expect double-digit headcount growth over the next one to two years. This escalating demand for fintech talent in Singapore continues to outpace local supply, despite educational institutions increasing courses to develop skills across finance and technology domains.

The talent report cited accelerating demand for specialised skill sets in financial services and technology, including in artificial intelligence (AI) and machine learning, DevSecOps (development, security, and operations) which automates the integration of security in software development, and open banking, which enables third-party developers to build financial institution applications.

The SFA-Accenture study said 58 per cent of fintech company leaders cite the lack of these relevant skillsets as a key driver of the talent gap. For instance, AI, machine learning and cognitive computing are seeing a 12 per cent increase in demand in future recruitment.

However, the global move to remote working during the pandemic has opened up opportunities to access more specialised or affordable skillsets beyond Singapore’s borders. In fact, 54 per cent of companies surveyed in the 2021 report already have more than half of their employees working outside Singapore.