Singapore Banks Record $229.1M In Fintech Funds

Singapore banked a record high of US$229.1 million in fintech funding last years, fuelled by two major deals in the fourth quarter and the government's goal to establish the country as a fintech hub.

Two of the top 10 deals in Asia were inked in Singapore in fourth-quarter 2017, where GoSwiff snagged a US$100 million buyout by Paynear Solutions and Smartkarma raised US$13.5 million in its Series B round.

Monetary Authority of Singapore (MAS) also continued to drive fintech activities in a bid to demonstrate the country's value as an Asian fintech hub, according to KPMG's Pulse of Fintech report. In particular, the Singapore industry regulator focused on areas such as blockchain, artificial intelligence (AI), and machine learning.

KPMG added that the country had succeeded to attracting significant foreign attention, drawing established VC (venture capital) funds, large corporates, and other major fintech companies to the city-state to make investments or establish a local presence, tapping Singapore as their Southeast Asian base.

MAS this year was making "financial inclusion" a top priority and hoped to make it more accessible and cost-effective for foreigners working in the country to remit payments home.

KPMG in Singapore's head of financial services advisory, Chia Tek Yew, said: "In Singapore and across Southeast Asia, financial inclusion is a big focus area, with fintechs focused on everything from micropayments and microlending, to remittances, and even microinsurance.

"Given the fragmented markets, fintechs are not taking a disruptive approach to these services, focusing instead on building partnerships with telcos and other local players in order to better engage with potential customers," Chia said.

While Singapore saw record fintech investment driven by a stellar fourth quarter, funding across Asia dipped in the quarter, according to the KPMG report. The region had clocked more than US$1 billion in the third quarter of 2017, but saw fintech funds dropped to US$748 million in the last quarter.

The decline was largely attributed to lower fintech investment in China, where the fourth quarter saw only US$45.8 million in funds, pushing the year's total investment to US$1.33 billion.

For the year, Asia's fintech funds peaked at US$3.85 billion, compared to more than US$10 billion in 2016. Corporate investment, though, climbed to 31 percent of overall funds in the fourth quarter of 2017, compared to 11 percent in the third quarter.

Worldwide, fintech funds crossed US$31 billion last year, fulled by a strong fourth quarter that raked in US$8.7 billion. More than 1,000 VC transactions were processed in 2017, with private equity deals clocking a new record of 139. The year also saw 336 merger and acquisitions made in the fintech sector, KPMG said.

Specifically, insurance tech (insurtech) and blockchain saw record VC investment and deal volume last year, registering US$2.1 billlion across 247 deals and US$512 million across 92 deals, respectively.

Blockchain was expected to see continued investor interest in 2018, as use cases further development in several markets, KPMG said. For instance, in Singapore, MAS recently collaborated with three Asian banks to develop a blockchain-based proof-of-concept aimed at streamlining KYC (know-your-customer) processes.