FinTech Singapore: A guide to investment ventures
Singapore, an island nation with a population of less than 6 million people and a total land area of less than 300 square miles. Yet, the FinTech climate and growth in Singapore are anything but diminutive, thanks to the country’s world-class infrastructure, skilled workforce and ultra-high-speed fibre capabilities. In late 2019, FinTech investments in Singapore jumped by a whopping 69% to US $735 million from the same period of the previous year, placing it just behind China and India in the Asia-Pacific region in terms of growth. In the investment breakdown, 34% of FinTech fundraising was directed towards payment start-ups, the lending category took 20%, and insurtechs took 17%. As most companies in the UK are looking to branch out of the EU after Brexit, Singapore serves as an excellent diving board into the Asia-Pacific market. Singapore acts as a gateway to Southeast Asia, the third-largest economy in the world with 600 million people residing in the 11 countries of the region. The ease of setting up a business in Singapore means that over half of the 37,400 international companies with branches there, set up offices in Singapore specifically to run their Asia-Pacific operations. Singapore is also an invaluable contributor to the economy in ASEAN, especially in terms of FinTech. As of September 2019, 45% of FinTech firms in ASEAN base their operations in Singapore. Singapore-based FinTech’s also dominated global funding in ASEAN countries with a 51% share of the funding going to the city-state in Q3 of 2019. Singapore is known for its commitment to international partnerships, start-up-centric government incentives and investments towards cultivating innovation, which is why it has seen such rapid growth, leading it to be the FinTech powerhouse that it is today.
The FinTech Bridge between the UK and Singapore was the first of its kind between the UK and any other nation. In 2016 at Downing Street, a regulatory agreement between the Financial Conduct Authority (FCA) and the Monetary Authority of Singapore (MAS) was signed by Charles Roxburgh, Director General (Financial Services) of HM Treasury, and Jacqueline Loh, Deputy Managing Director (MAS) . The agreement opened doors for the nations to share and use information on financial services innovation in their respective markets, championing their common goal of increasing collaboration and breaking down barriers to market. Despite their intentions, the agreement is a unique one as the market focus between the UK and Singapore are noticeably different. In the UK the focus for FinTech tends to be on disrupting existing providers who dominate the market, thus increasing competition and making services cheaper, better and more consumer centric. Singapore however, due to its small population, serves as more of a testing ground and gateway to larger markets across Southeast Asia. The environment is more of a collaborative and inclusive one rather than disruptive. Recent examples of UK-based FinTech companies breaking new ground in Singapore are the UK’s representatives in the annual Singapore FinTech Festival which celebrates the power and opportunities that FinTech’s can unlock. In 2019, 11 companies were sent to head the UK’s trade mission to Singapore. This year however, the number of expected representatives from the UK has increased to 24, including companies like NorthRow, Quantexa, Keyless Technologies, FCA, Cleo Finance and many more .
FinTech’s based in the Midlands would greatly benefit from networking opportunities like this if they’re looking to break into a bigger market, like ASEAN or Asia-Pacific, as Singapore is the ideal backdrop for such a move. In Deloitte’s 2018 International Wealth Management Centre Ranking report, Singapore ranked second to Switzerland for performance and competitiveness, and first in the category of business environment suitable for FinTech hubs. The attitude in Singapore towards wealth management is to centre around full transparency with clients, provide numerous suitable products, the protection of ‘vulnerable’ clients and strict client onboarding rules to prevent fraud. Something that distinguishes Singapore’s digital banking license is that the Monetary Authority of Singapore (MAS) has shown the most interest in companies that look at banking in a totally new way, such as internet-only banks. Last year, Singapore was the seat of the API Exchange, a global, open-architecture platform that allowed FinTech’s and Financial Institutions to connect and collaboratively design solutions together. This further highlights the importance the MAS places on FinTech’s and collaboration with established financial bodies.
Midlands-based FinTech companies, especially ones centred around wealth management and private banking, like Wealth Wizards and Moneyinfo, could utilise Singapore’s unique policies towards wealth management to their advantage in order to build a presence there. Companies like these should actively engage with regulators in the UK and through the FinTech bridge, attempt to make connections in Singapore and establish a presence. Alternatively, the participation in events like the API Exchange and the Singapore FinTech Festival is a must for any Midlands-based FinTech looking for opportunities in the Asia-Pacific region. There is a wealth of opportunity and support waiting in Singapore for any budding FinTech company based in the UK. Now, thanks to the established FinTech bridge, it is the perfect time for these companies to use Singapore as a launchpad into the Southeast Asian and Asia-Pacific markets.
References:
"FinTech investments in Singapore jump 69% to $1b in first 9 ...." 15 Oct. 2019, https://www.straitstimes.com/business/banking/FinTech-investments-in-singapore-jump-69-to-595m-in-first-9-months-of-2019-report. Accessed 10 Aug. 2020.
"Singapore can be Asia hub for MNCs as HK turns to China ...." 30 Mar. 2018, https://www.businesstimes.com.sg/government-economy/singapore-can-be-asia-hub-for-mncs-as-hk-turns-to-china. Accessed 10 Aug. 2020.
"FinTech in ASEAN: From Start-up to Scale-up (2019) | UOB ...." https://www.uobgroup.com/techecosystem/news-insights-FinTech-in-asean-2019.html. Accessed 16 Aug. 2020.
"FinTech powerhouse: Understanding the rise of Singapore ...." https://www.FinTechfutures.com/2020/03/FinTech-powerhouse-understanding-the-rise-of-singapore/. Accessed 16 Aug. 2020.
"First ever FinTech bridge established between Britain ... - Gov.uk." 11 May. 2016, https://www.gov.uk/government/news/first-ever-FinTech-bridge-established-between-britain-and-singapore. Accessed 10 Aug. 2020.
"Singapore FinTech Festival." https://www.FinTechfestival.sg/. Accessed 15 Aug. 2020.
"International Wealth Management Centre Ranking ... - Deloitte." https://www2.deloitte.com/ch/en/pages/financial-services/articles/the-deloitte-wealth-management-centre-ranking-2018.html. Accessed 16 Aug. 2020.
"API Exchange (APIX) - Monetary Authority of Singapore." 21 Aug. 2019, https://www.mas.gov.sg/development/FinTech/api-exchange. Accessed 16 Aug. 2020.
