Fintech funding in ASEAN has more than tripled to a record high of US$3.5 billion in 2021 from 2020, with Singapore retaining the top spot thanks to its mega-rounds.
According to the “Fintech in ASEAN 2021: Digital Takes Flight” report by UOB, PwC Singapore and the Singapore Fintech Association (SFA), the rebound in fintech funding was driven by 167 deals including 13 mega-rounds, which accounted for US$2 billion of the total funding.
Most investors showed strong interest in late-stage fintech firms which secured 10 out of 13 mega-rounds this year.
This trend signals a shift in the strategy of investors across several ASEAN markets as they take a more cautious and risk-adverse approach of backing mature firms that are seen as standing a higher chance of emerging stronger from the pandemic.
Given the growing adoption of digital payments in ASEAN, investors placed their confidence in, and injected the highest amount of funds into, late-stage fintech firms from the payments sector.
Janet Young, Head of Group Channels and Digitalisation, UOB, said,
“The revival of investments in ASEAN’s fintech industry has seen funding break through US$3.5 billion this year.
Looking beyond this strong rebound, the opportunity to forge strong win-win-win partnerships between incumbent banks, fintech firms and ecosystem platform players and expanding across the region will remain instrumental in propelling the sustainable growth of ASEAN’s fintech firms.”
Singapore retains top spot in fintech funding, attracting six out of 13 mega-rounds
Singapore-based fintech firms continued to attract the strongest funding in ASEAN, securing almost half (49 percent) of the total 167 deals, amounting to US$1.6 billion in funding.
This includes six mega-rounds worth US$972 million in total.
Meanwhile, Indonesia retained its second position this year, raking in US$904 million in funding (26 percent), followed by Vietnam which rebounded sharply to US$375 million in funding (11 percent) as a result of two mega rounds.
Fintech firms in Singapore and Indonesia received funding in almost every category, an indication of a vibrant and growing industry with an active investment scene.
Shadab Taiyabi, President at SFA said,
“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.
SFA remains committed to supporting and facilitating the FinTech ecosystem to foster new opportunities for companies to collaborate, connect and co-create.”
Funding in investment tech and cryptocurrency firms saw strongest growth
Funds injected to investment tech and cryptocurrency firms in ASEAN saw the strongest growth this year, taking both categories to the second and third place respectively after payments.
This is also the first time in six years that alternative lending has been edged out of the top three spots in terms of funding given the increasing interest in digital investments and digital currencies among consumers.
Compared with 2020, funding for investment tech firms grew by six times to US$457 million this year, in line with growing consumer interest in the use of digital trading and wealth management tools.
Funding for cryptocurrency firms came in third at US$356 million as they attracted five times the funding received in 2020.
Given that nine in 10 ASEAN consumers have started or plan to use cryptocurrencies and central bank digital currencies, the share of cryptocurrency firms in the region is expected to grow as players tap into consumers’ rising interest.
Payments remained the most funded fintech category in ASEAN this year at US$1.9 billion.
The category continued to make up the majority of fintech firms in most countries, except for Singapore (cryptocurrency) and Thailand (alternative lending).
Featured image: Unsplash
