ASEAN fintech funding achieves record $3.5b in 2021: study

Funding to investment tech and cryptocurrency firms grew by over 5x since 2020.

Funding for financial technology (fintech) in ASEAN achieved a historic high of US$3.5b in the first nine months of 2021, already three times higher than the whole of 2020, according to a report by UOB, PwC Singapore, and the Singapore Fintech Association (SFA).

A total of 167 fintech deals were made in the first nine months of the year. This included 13 mega-rounds, which collectively accounted for $2b of the total funding.

Most investors showed strong interest in late-stage fintech firms which secured 10 out of 13 mega-rounds this year, the study found.

“This trend signals a shift in the strategy of investors across several ASEAN markets as they take a more cautious and risk-averse approach of backing mature firms that are seen as standing a higher chance of emerging stronger from the pandemic,” it read.

Singapore retained its top spot in fintech funding, attracting six of the 13 mega-rounds or $972m-worth of funding.

The Lion City also secured almost half (49%) of the 167 deals, raking in $1.6b in total.

Indonesia retained its second spot, clinching $904m or 26% of the total funding to ASEAN. Vietnam’s fintech closed the top three, attracting $375m or 11% of the funding. 

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, the study noted.

Shadab Taiyabi, President at SFA, noted that a key driver of this resurgence was the pandemic, which has catalysed digital adoption in Singapore and across the region.

“Singapore, in particular, has seen the most robust funding, supported by a growing number of fintech looking to set up their headquarters here due to the strong regulatory support, opportunities for regional collaboration and a flourishing startup-focused investor ecosystem,” Taiyabi added. 

Funding for ASEAN’s investment tech and cryptocurrency firms saw the biggest growth this year, bumping alternative lending firms out of the top three spots in terms of funding for the first time in six years. 

Compared with 2020, funding for investment tech firms grew by six times to $457m this year, in line with growing consumer interest. Six out of 10 ASEAN consumers have used digital tools such as robo-advisers and online brokerage platforms for their investment needs, according to a survey conducted by UOB, PwC, and SFA.

Funding for cryptocurrency firms totalled $356m, clinching 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, the study noted.

Payments remained the most funded fintech category in ASEAN, clinching $1.9b of the funding.

“With digital payments becoming the norm, and areas such as wealthtech and crypto-assets fast gaining interest, our research findings are indicative that consumers in ASEAN have come to embrace a wide range of fintech solutions along with the digital experience, and that they are ready to take on the digital future,” said Wanyi Wong, fintech leader, PwC Singapore.

“The question is no longer whether FinTech will transform the business landscape, but how to best adapt and embed a FinTech-centered strategy, underlined with inclusion, trust, transparency, and accountability, to emerge as market leaders,” Wong added.