Understanding Singapore’s FinTech Ecosystem 2020

Overview of Singapore’s FinTech Industry

Singapore’s Financial Technology (FinTech) has undoubtedly grown by leaps and bounds since the government kick-started its comprehensive and well-funded plan to achieve its vision of transforming Singapore into a Smart Financial Center.

According to Findexable’s Global FinTech Index 2020, Singapore is Asia’s highest-ranking FinTech city. Singapore’s current standing in the incredibly competitive sphere of FinTech is the result of conscientious and strategic planning involving the interplay between manpower, global connectivity, market reach, progressive regulations, and funding. Today, Singapore has successfully built a vibrant FinTech community, enabling the development of the ecosystem by facilitating collaboration between market participants and stakeholders.

Singapore’s FinTech Journey

In 2014, Prime Minister Lee Hsien Loong unveiled plans to transform Singapore into the world’s first ‘smart nation’ by 2030. Working alongside with Monetary Authority of Singapore (MAS), Singapore’s central bank and financial regulator, the vision of transforming Singapore into a smart financial center was born.

We have taken bold strides in the FinTech journey and one of the triumphant victories for Singapore is the holding of the annual Singapore FinTech Festival (SFF). This FinTech event is highly anticipated by professionals across the globe with over 60,000 participants from more than 140 countries. Presently, it is the world’s largest FinTech festival and a global platform for the FinTech community to connect, collaborate, and co-create with one another.

In June 2019, the MAS has also announced the issuance of up to 5 new digital bank licenses with the aim of adding diversity and strengthening Singapore’s banking system in the digital economy. With new digital players in the market, they are able to provide for the under-served segments and also fuel competition amongst existing banks to further improve the quality of their digital financial services.

Moving forward to 2020, despite the global pandemic brought on by the COVID-19 virus, Singapore has demonstrated resilience in its plan to boost the FinTech industry. In the first quarter of 2020, MAS announced a $125 Million support package for the financial and FinTech sectors to ease the immediate challenges brought on by Covid-19 and push forth their recovery and future expansion. Another round of financial support was further rolled out via a collaboration between MAS, SFA, and AMTD, providing a total of $6 Million FinTech Solidarity Grant to support Singapore-based FinTech firms in terms of retaining its employees and attaining future growth.

The growth and transformation process has been an arduous one, yet the government and Singaporeans remain steadfast in the journey of establishing a thriving FinTech hub that will pulsate at the heart of Singapore’s digital economy.

What exactly is FinTech?

FinTech – a portmanteau of financial technology – as the term suggests, refers to new technology that seeks to improve and automate the delivery and use of financial services. In Singapore’s society today, it is safe to assume that most, if not all, would have used or come across FinTech innovations. By combining the latest technological developments with financial services or software, FinTech is redefining how money flows from one place to another, which explains why FinTech is often paired with the word ‘disruption’.

One prominent example would be the introduction of GrabPay. Grab is widely known as a ridesharing service provider and GrabPay is their foray into digital payments. It uses app-based technology to allow its customers to make and receive payment online, rendering physical ATMs and certain lines of services provided by traditional bank outlets redundant. As evident, technological advancement has allowed small organisations to perform on a level playing field with huge corporations. With GrabPay, it has potentially taken business from traditional banks and ‘disrupted’ the natural order of things – all just using an application.

FinTech has successfully changed the way many consumers track, manage, and facilitate their finances. It is an industry that encompasses a huge potential for extraordinary growth.  

Singapore FinTech’s Ecosystem

As FinTech gains more traction and attention amongst entrepreneurs and companies, including established financial institutions and multinational corporations, investors are pouring in funds hoping to ride the FinTech wave. Coupled with the support of the government, regulators are brought in to safeguard the FinTech landscape and educational institutions are beefing up their courses to produce more FinTech talents. Ultimately, the goal of these new inventions is to provide a more seamless and user-focused experience for the consumers. With the establishment of such an ecosystem, various stakeholders work hand in hand to create a prosperous financial landscape in Singapore.

With the explosion of FinTech start-ups in Singapore, it is hard to keep track of the different players and the landscape it competes in. Read on to understand more about the FinTech Landscape in Singapore.

FinTech companies can be said to compete in mainly 6 categories (non-exhaustive), with some firms falling under more than one segments:

1. Investment / Wealth Management

Under the Wealth Management segment, the Robo-advisory category is the first topic that comes to mind. With Singapore’s aim to be one of the world’s leading financial centers, it is no surprise that Singaporeans are well-equipped with the knowledge of wealth management. This translates to the success of Robo-advisors as individuals look for cost-effective ways to invest globally with little effort.

FinTech firms such as StashAway, AutoWealth, Syfe, and Kristal AI help individuals manage and grow their wealth with algorithms calculated and programmed by humans based on financial models and risk appetites set by the companies.

2. Credit Scoring / P2P Lending

P2P Lending refers to peer-to-peer lending. With the advancement in FinTech, these platforms can now connect borrowers with investors via a single digital platform. In Singapore, consumer lending used to be relatively muted with heavy regulations. However, with the recent regulatory relaxation, P2P Lending platforms serve as an alternative where SME owners are able to gain access to sources of funding that are tailored to their specific needs.

Modern-day P2P Lending platforms such as Funding Societies, SeedIN and Validus are some of Singapore’s leading crowdfunding platforms, designed to support the finances of local SMEs. A growing segment of this space is the emergence of consumer P2P Lending platforms. FinTech start-ups such as Hoolah and Turnkey Lender are now able to lend a small sum of capital and allow consumers to pay big-ticket items in instalments.  

3. InsurTech

InsurTech is evolving rapidly in Singapore with players taking big steps forward. In Southeast Asia, Singapore has become the hub for InsurTech innovation, witnessing a bloom of over 80 InsurTech start-ups. InsurTech being the combination of the words “Insurance” and “Technology”, it simply refers to the use of technology to improve the services and disrupt the insurance industry. These start-ups would usually target segments of the markets that are left out by the large insurance firms.

InsurTech firms such as Singlife, FWD, and MoneyOwl are bringing new and exciting changes to the insurance industry. With the inception of digital platforms, these companies are able to streamline and enhance backend processes, improve customer experience, and save costs. Today, consumers enjoy the benefits of ultra-customized policies, new reservoirs of data from IoT devices, and dynamically price premiums.

4. Payments and Rewards

This category is highly associated with FinTech and can be termed as the face of the FinTech wave. The rise of online payment systems needs no introduction. In fact, there are more viable options for taking online payments than the one everybody can name. Technology in this aspect has opened the door for a number of competitors to challenge the main players like Paypal, by offering cheaper fees, seamless transactions, and heighten security.

Online payment systems such as GrabPay, FavePay, SingtelDash, and DBS Paylah! are just a few out of the numerous options out there. These payment systems bring along rewards in the form of deals, discounts, vouchers, and rebates.

5. International Funds Transfer

As Singapore is crowned as one of the world’s leading financial hubs, it is no surprise that transferring funds internationally is one of the main aspects of the Singapore’s FinTech ecosystem. Traditional banks provide good remittance services with their robust networks and safety. However, such services come with fees and hidden charges.

As a result, new players introduced alternative platforms such as TransferWise, InstaRem, and WorldFirst to provide cheap, fair, and simple international money transfers. With these remittance platforms, consumers enjoy greater flexibility in selecting the platforms that best suit their needs.

6. RegTech

RegTech is one of the newest introductions to the FinTech ecosystem. Today, FinTech has entered a phase of rapid development, with the emergence of new start-ups and innovations. This new era presents fresh challenges for regulators and highlights the need for a parallel development of regulatory technology in the FinTech space. Thus, RegTech was born.

RegTech firms such as AiDa, InstaRem, and Handshakes offer institutions and regulators better and more efficient alternatives to carry out the complicated monitoring, reporting, and compliance processes.

Build your A-Team in FinTech today

2020 marks the beginning of a new decade of FinTech innovations and breakthroughs. Today, the finance industry is going through an evolutionary phase where ground-breaking inventions are being introduced to the market, disrupting societal norms and consumers’ daily routine. The demands from businesses as well as individuals are greater than before, pushing new entrants and existing firms to develop innovative solutions.

Having thoughts on joining Singapore’s FinTech Ecosystem? To survive the fierce competition within the FinTech space, firms are required to be dynamic, on the ball, and swift. Opportunities are lost every minute wasted on the administrative and tedious recruitment process, while FinTech start-ups and organisations focus on their core competencies, trust EPS Consultants, the FinTech-specialised employment agency, to source and bring on board the best FinTech talents for you.

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