Asean fintechs attracted 25% more funding this year: report

Singapore

FINTECH firms based in Asean attracted 25 per cent more funding in the first 10 months of 2018 over the funding captured in the full year of 2017, with the US$222 million of funding taken up so far in Singapore alone making up nearly half of the funding earmarked for fintech within Asean. For fintechs in all of Asean, investors poured in US$458 million of funds from January to October this year. (see amendment)

These were the findings from a report by UOB released on Tuesday. It showed that Singapore continued to attract the most funding within the region, with the US$222 million figure a record, albeit in a nascent space.

The money trail is also leading to Indonesia, with the country attracting US$185 million in fintech funding in the first 10 months of the year. The report suggested that the draw comes from the country's rising middle class, and its large population of digitally savvy customers.

Turning back to Singapore, the Republic also now houses more fintech firms in the six key markets of Asean than a year ago. Today, the country plays host to 43 per cent of all fintech firms in Asean-6, up from 39 per cent in 2017. Asean-6 refers to Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

The investment dollars are mainly going towards alternative lending, which speaks to the growing development of credit assessment through data analytics. Fintech firms involved in alternative lending received the lion's share of funding in the first 10 months of 2018, at 58 per cent of all fintech funding in Asean-6. Alternative lending would include credit through peer-to-peer lending.

Notably, more than 40 per cent of the total investment dollars in Indonesia went to alternative lending providers. The UOB findings cited data from a 2017 Asian Development Bank report that showed in Indonesia, just about 40 per cent of the population have a bank account. Retail credit through informal forms of borrowing - which typically includes moneylenders or friends and family - make up three-quarters of consumer borrowings there.

UOB separately ran a survey with small-and-medium enterprises (SMEs), which showed that SMEs are looking to invest in digital solutions, including in digital payments that could come from fintechs.

The survey showed that on average, SMEs are willing to invest between S$5,000 and S$10,000 on digital solutions.

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Amendment note:

The story has been revised to clarify that Asean fintechs attracted 25 per cent more funding this year, and not Singapore fintechs alone.