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Singapore’s fintech displaying resilience amid Covid downturn

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Fintech firms in Singapore raised S$462 million (US$332 million) in equity funding in the first half of this year – 19 per cent higher than over the same period last year. THE STRAITS TIMES

Singapore’s fintech displaying resilience amid Covid downturn

Fintech in Singapore has shown remarkable resilience even as the economy faces its worst downturn amid the coronavirus outbreak.

The surge in digital services use during the Covid-19 crisis is expected to further entrench the republic as a global fintech hub.

The number of fintech companies in the city-state has grown to 1,000 this year.

This is up from 600 last year, which saw a net increase of about 4,900 jobs in financial services and fintech, said the Monetary Authority of Singapore (MAS), the central bank.

Reflecting unflinching investor focus on the industry, fintech firms in Singapore raised S$462 million (US$332 million) in equity funding in the first half of this year – 19 per cent higher than over the same period last year, said BCG FinTech Control Tower, a research-focused unit developed jointly by the Boston Consulting Group and Expand Research.

According to the Singapore Exchange (SGX), the most traded fintech-focused stocks in recent months include iFast, Synagie and Silverlake Axis. The trio have averaged a 21 per cent total return this year to July 15.

There is a good chance that some of Singapore’s home-grown pure fintech companies will achieve unicorn status – unicorns being start-ups with a value exceeding $1 billion – over the next few years, said Dr John Chessher, senior adviser at Singapore’s Stirling Coleman Capital.

Current contenders include Smartkarma, a platform which provides investment research, and Everex, which is a blockchain-based solutions provider for settlements, transfers and currency exchange, Dr Chessher wrote in an SGX market update report.

“Singapore has put tremendous effort into providing encouragement and support for fintech start-ups and having a high-profile pure fintech winner would be a confirmation that this strategy has been a success, as well as strengthening the country’s position as a preferred destination for international talent and capital,” he said.

Another measure of success in the fintech universe is the acquisition of a start-up by a larger peer. Back in March, for instance, Hong Kong-based AMTD Group acquired a controlling stake in PolicyPal, an insurtech firm with a digital insurance brokerage licence from MAS.

Singapore’s fintech sector saw a total of S$188 million in merger and acquisition deals in the first six months of this year, said MAS.

Fintech covers a broad range of verticals from mobile payments and crowdfunding to insurance.

It is a core part of the Smart Nation initiative, launched in 2014 to take Singapore to the forefront of digital transformation.

Singapore was ranked fourth among the top global fintech hubs – behind the San Francisco Bay area, London and New York – by the Findexable Global Fintech Index 2020.

Insurtech, lending and payments were the republic’s particular strengths.

The index tipped TenX, Quoine and Kyber Network as local fintech leaders.

Dr Chessher said the strength of the fintech industry in Singapore owes a lot to the government’s multi-pronged approach to promote its development.

“Singapore has arguably been unique in its fintech-specific initiatives.

“In 2015, the MAS appointed a chief fintech officer who has focused on three key areas – helping financial institutions embrace and adopt digital technology, enabling fintechs to grow, and partnering with banks and other financial institutions,” he said.

In addition to the usual support given to early-stage businesses by entities, such as Startup SG, specific fintech hubs have been established and a number of government initiatives have provided impetus to local fintech development.

Those initiatives include the Global Trade Connectivity Network, which aims at digitising trade financing, and Project Ubin, which investigates the use of distributed ledger technology and blockchain for clearing and settlement activities.

Last year, MAS announced that it would issue up to five digital banking licences.

The April award of 5G licences will also open up a range of new possibilities in the fintech sector.



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