Number of fintech deals in Q2 continues to decline in Singapore: KPMG

INVESTMENT in financial technology, or fintech, in Singapore has risen in the second quarter of this year to US$61.5 million, despite a continued decline in the number of deals closed, KPMG said in its Pulse of Fintech Q2 2017 report.

The decline may simply reflect the growing move towards a more partnership-oriented fintech model in the country, KPMG said.

It suggested that when analysed on a quarterly basis, any one country in a developing venture ecosystem such as Asia would experience significant variability in deal volume.

"That said, given the bevy of heftier financings in the Singaporean fintech scene throughout 2016, temporality is definitely playing more of a role thus far in 2017, with those companies best placed to raise funds or get acquired, having already done so."

The Monetary Authority of Singapore (MAS) continues to drive the majority of fintech activity in Singapore. During the quarter, it began to shift its focus from education and innovation to promoting technology adoption and attracting companies to launch offerings in Singapore. The central bank hopes to see fintechs increasingly use Singapore as a base to pilot and then deploy solutions into other countries within South-east Asia, such as Indonesia and Thailand.

"The success of these cross-border solutions could prove the viability of using Singapore as a springboard for Asia-based expansion," KPMG said.

Tek Yew Chia, head of Financial Services Advisory at KPMG in Singapore, also noted that blockchain, or distributed ledger technology, is expected to remain a relatively hot area of investment in Singapore and across most of Asia.

"There seems to be a major push to transform Singapore into the world's blockchain leader, with an ever-increasing number of use cases in the country aimed at testing blockchain in government trade, land registry and tax functions in addition to traditional banking and insurance."

With blockchain, it is envisioned that records of all virtual currency transactions can be viewed real-time and securely on a distributed network of computers. This will help banks cut the cost of processing payments, and also creates new revenue-generating products and services.