Singapore fintechs draw US$3.9b for 2021; crypto, blockchain segment thumps payment startups

SINGAPORE fintech investments for 2021 have hit a 5-year high of US$3.9 billion, up 59 per cent from US$2.5 billion according to consultancy KPMG's Pulse of Fintech report. (see Amendment note)

This follows the regional trend of fintech investments rising, as Asia-Pacific attracted US$27.5 billion for 2021- of which the second half of 2021 contributed US$17.4 billion. But globally fintech funding has shrunk slightly from US$109 billion in H1 2021 to US$101 billion in H2 2021.(see Amendment note)

"We're seeing an incredible amount of interest in all manner of fintech companies, with record funding in areas like blockchain and crypto, cybersecurity and wealthtech. While payments remain a significant driver of fintech activity, the sector is broadening every day," said Anton Ruddenklau, global fintech leader, KPMG International.

Deals grew 37 per cent from 139 deals in H2 2020 to 191 deals in 2021, as crypto and blockchain startups snatched the investment crown from payment startups. These startups accounted for US$1.5 billion over 82 deals in  2021, a surge from US$109.8 million in 2020. The money raised for crypto and blockchain startups went towards underlying infrastructure and software rather than services according to KPMG. (see Amendment note)

The rise in crypto and blockchain investments is also mirrored globally and regionally, with the segment garnering US$30 billion, up from US$5.4 billion in the same time period. In Asia-Pacific crypto and blockchain investments in  2021 hit US$3.1 billion up from US$386.3 million in  2020.

"In Singapore, the surge in investments into crypto and blockchain have also outpaced that of payments which long held the top spot here," said Ruddenklau.

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Buy now, pay later; embedded banking; and open banking have helped to keep investor interest in payments, garnering just US$628.4 million in Singapore, up from US$60 million in 2020, falling behind crypto and blockchain. This trend does mirror global investments which have grown to US$51.7 billion in 2021, up from US$29.1 billion in H2 2020, but have remained ahead of crypto and blockchain investments.

Increased investments into crypto have arrived as cryptocurrencies are seeing greater scrutiny by the Monetary Authority of Singapore. Recently the regulator released guidelines prohibiting crypto players from advertising to the general public, including crypto currency ATMs.

KPMG predicts that investments could surge for banking replacements in 2022, as legacy infrastructure hits their limits.

"Given how many banks are beginning to see the major limitations inherent in their legacy architecture and technologies, we are also expecting a surge in investment into banking replacements able to help them rethink core banking services," said Ruddenklau.

Amendment note: The article previously attributed the funding amount to H2 2021 rather than 2021.

Amendment note: The article previously attributed the funding amount to 2020 rather than H2 2021.

Amendment note: The article previously attributed the funding amount to H2 2020 and H2 2021 rather than 2020 and 2021.