After five years of high-growth, Singapore’s fintech companies are now prioritizing profitability in response to competitive pressure and a challenging funding environment.
According to a new report jointly published by PwC Singapore and Singapore Fintech Association (SFA), fintech companies are pursuing this goal through various strategies, including leveraging technology to improve cost efficiency, focusing on their core markets and enhancing their product offerings through acquisitions.
The report, released on October 29, provides an updated analysis on Singapore’s fintech landscape, examining emerging trends and the sector’s evolution since 2022.
Drawing on insights from a survey of over 160 fintech firms in Singapore, the report outlines recent strategic shifts within the industry. It highlights that while fintech investments declined substantially in 2023 and 2024, mergers and acquisitions (M&A) activity picked up steam as companies used M&A to strengthen their product portfolios, expand geographically, and increase their market share.
Several high-profile acquisitions reflect this trend: Ant Group acquired 2C2P in 2022 to accelerate digital payment adoption and strengthen its presence across Southeast Asia; digital financing platform Funding Societies acquired in 2022 payment solution provider CardUp to expand its offerings and capabilities; and more recently, in 2023, FOMO Group acquired CapBridge and 1exchange to extend its reach into capital markets.
The report also notes a strong shift towards adopting emerging technologies. Among the 160+ fintech firms polled, 43% identified advanced technologies, including artificial intelligence (AI) and blockchain, as their main focus, motivated by the potential for increased efficiency and the need to preserve profit margins in a competitive market.
Market expansion through offering new products and entering into new market ranks as the second biggest priority, with 29% of respondents focused on these areas.
Sustainable payment solutions and financial inclusion, as well as talent acquisition and retention, follow suit, identified by a combined 14% as a strategic priority. According to the report, these areas of focus are being driven by the ongoing need to maintain a competitive edge over both peers and the established financial institution players.
Despite challenges and rising competitive landscape, the overall outlook among Singapore fintech companies remains positive, with 80% of respondents expressing optimism about the new opportunity and growth in the fintech space.
Web3, insurtech and ESGtech take center stage
Looking at the Singapore fintech sector, the report notes that the payments sector remains the biggest vertical, represented by 25% of the survey respondents. Web3 and regtech come next, with a 15% share each. Combined, these three categories make up 55% of the companies surveyed.
The report notes that fintech categories in Singapore are evolving at varied speed, with some verticals growing much faster than others. Web3, for example, has expanded substantially over the past two years, soaring from just 5% of the Singapore fintech ecosystem in 2022 to 16% in 2024.
According to the report, this growth can be attributed to regulatory clarity and new guidelines released by the Monetary Authority of Singapore (MAS), allowing young startups to mitigate risks, plan strategically and innovate confidently.
Insurtech is another fintech vertical that’s recorded considerable growth, driven by opportunities for digital transformation and innovation in the insurance sector. Several prominent deals reflect this trend, including Sumitomo Life’s acquisition of Singapore Life (Singlife) and Bolttech’s US$246 million Series B funding round in 2023.
In terms of investment value, Singapore’s insurtech market is estimated to be worth US$142.07 million, according to Mordor Intelligence. Through 2029, the industry is projected to grow by 9.64% annually to reach US$225.08 million.
The ESGtech sector, which comprises fintech companies providing solutions in the environmental, social and governance (ESG) space, is another vertical that’s welcomed new entrants. This growth has been supported by incentives offered by the government and public agencies, such as the S$2.38 billion commitment by MAS to climate-related investments, as well as the rollout in 2023 of Gprnt.ai, a digital platform that facilitates how the financial sector and real economy collect, access and act upon ESG data to support their sustainability initiatives.
Singapore’s changing regulatory environment is also driving demand for ESG-focused technology. Starting from financial year 2025, all listed companies in Singapore will be required to make climate-related disclosures in line with the IFRS’ International Sustainability Standards Board (ISSB) standards. The new requirement will also apply to large, non-listed companies, defined as those with at least S$1 billion in revenue and S$500 million in assets in 2027.
A hub for leading fintech companies
Despite the ongoing funding downturn and strategic shifts, Singapore continues to be home to many iconic fintech unicorns and remains an appealing destination for investments due to its world class infrastructure, proactive regulatory support and strong trade links with neighboring countries, the report says.
Among the 160+ fintech companies polled, 16% said they had a valuation of more than S$100 million, with the payments, lending and Web3 verticals leading the list.
Singapore’s current fintech unicorns include Coda, a payment solution specialist for digital content providers; Nium, an infrastructure for cross-border payments; and Bolttech, a platform connecting insurers, distributors and customers for insurance and protection products.
Featured image credit: edited from freepik
