Border-crossing and financial inclusion: The story of fintech in ASEAN
The MAS has catapulted the growth of fintech startups in Singapore thus creating a fintech boom in the island city-state.
Fintech is booming in Singapore, a city known for being a global financial hub. The island city-state has received the lion’s share of funding in Southeast Asia over the past five years, and funding has only increased exponentially.
In 2019 alone, fintech-related deals accumulated over a billion SGD, far outstripping the amount of funding received in 2018 according to research from Accenture. This has been facilitated in part by the state’s favourable business ecosystem, which boasts low corporate tax rates, political stability, and low barriers to entry.
The nation has also made active steps to support fintech’s growth, suggesting a continued boom ahead. From 2015 to 2020, the Monetary Authority of Singapore (MAS), the state’s central bank, set aside S$225 million (US$165 million) to support fintech initiatives, a programme which has helped fund the nation’s turn towards fintech.
Since then, the number of fintech firms has rapidly climbed from only 50 to more than 600. On the back of this success, MAS has announced that it is likely that the programme will be renewed as of 2020.
Given its stated intentions to support a diversified range of fintech companies, it is wise to assume that there will be an increased amount of spending on the industry and a growing set of funds available for new and maturing startups.
What kind of initiatives has MAS launched to support the fintech industry? From 2015, MAS has taken a proactive stance in creating a favourable regulatory environment for businesses, emphasising innovation in tandem with security as well as supporting upcoming projects.
This was demonstrated in 2016 when MAS announced a regulatory sandbox for fintech companies to test their products in a live environment. This initiative has only expanded since – in 2019, MAS announced Sandbox Express to provide an even faster option for incoming players.
Its commitment to liberalising the fintech industry was further displayed in 2018, when it announced that it would issue up to two digital full bank (DFB) licences and three digital whole bank (DWB) licences, thereby opening up the banking sector to more players.
The country also boasts a highly skilled workforce favourable to incoming fintech entrepreneurs and the development of the market. This workforce is only set to grow —in 2019, the National University of Singapore (NUS) announced the opening of a fintech lab in conjunction with business and financial institutions.
This lab will be responsible for training the next generation of entrepreneurs and professionals. This development signifies the country’s commitment to expanding the labour pool available for upcoming fintech companies and bids good news for the booming market.
Singapore’s strategic location at the heart of the Malay peninsula has also made it an ideal location for leapfrogging into ASEAN markets. ASEAN markets offer a large pool of people who lack access to traditional financial institutions and would be well served by the development of fintech firms.
(originally shared on E27.co
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