After five years of high growth, Singapore’s fintech companies are now prioritizing profitability in response to competitive pressures and a tough funding environment.
Fintech companies will leverage technology to improve cost efficiency, focus on core markets and strengthen product offerings through acquisitions, according to a new report jointly released by PwC Singapore and the Singapore FinTech Association (SFA). It pursues this goal through a variety of strategies, including:
The report is released on 29 October provides the latest analysis on Singapore’s fintech landscape, exploring emerging trends and the evolution of the sector in 2022 and beyond.
This report outlines recent strategic changes within the industry, based on insights from a survey of over 160 fintech companies in Singapore. The report notes that while fintech investments declined significantly in 2023 and 2024, mergers and acquisitions (M&A) ) emphasizes that activity has increased.
Several high-profile acquisitions reflect this trend: Ant Group obtained We will launch 2C2P in 2022 to accelerate the adoption of digital payments and strengthen our presence across Southeast Asia. Digital financial platform Funding Societies obtained In 2022, payment solutions provider CardUp expands its services and capabilities. And most recently, FOMO groups in 2023. obtained CapBridge and 1exchange extend reach into capital markets.
The report also notes major changes to the adoption of emerging technologies. Of the more than 160 fintech companies surveyed, 43% are motivated by the potential for increased efficiency and the need to maintain profit margins in a competitive market to invest in cutting-edge technologies such as artificial intelligence (AI) and blockchain. Technology was cited as the main focus.
Market expansion by offering new products or entering new markets is the second most important priority, with 29% of respondents focusing on these areas.
Sustainable payment solutions and financial inclusion, as well as talent acquisition and retention, follow suit, with a combined 14% citing them as strategic priorities. These areas of focus are driven by the continued need to remain competitive relative to industry peers and established financial institutions, according to the report.
Despite challenges and an increasingly competitive environment, the overall outlook for fintech companies in Singapore remains positive, with 80% of respondents expressing optimism about new opportunities and growth in the fintech space. Masu.
Web3, insurtech, and ESG tech are the main players
Turning to Singapore’s fintech sector, the report notes that the payments sector remains the largest sector, accounting for 25% of survey respondents. This is followed by Web3 and Regtech, each with a 15% share. Together, these three categories account for 55% of the companies surveyed.
The report notes that the fintech category in Singapore is evolving at different speeds, with some industries growing much faster than others. For example, Web3 has expanded significantly over the past two years, jumping from just 5% of Singapore’s fintech ecosystem in 2022 to 16% in 2024.
The report says this growth is thanks to regulatory clarity and new guidelines released by the Monetary Authority of Singapore (MAS), allowing young startups to reduce risk, plan strategically and innovate with confidence. It is thought that it is now possible.
Insurtech is another fintech industry that is registering significant growth due to digital transformation and innovation opportunities in the insurance sector. Several notable deals reflect this trend. Regarding the acquisition of Singapore Life (Singlife) by Sumitomo Life and Volttech’s US$246 million Series B 2023 funding round.
In terms of investment value, Singapore’s insurtech market is estimated to be worth US$142.07 million. According to To Mordor Intelligence. Until 2029, the industry is projected to grow at 9.64% annually to reach USD 225.08 million.
The ESG tech sector is comprised of fintech companies that provide solutions in the environmental, social and governance (ESG) field, and is another sector that is welcoming new entrants. This growth is supported by incentives provided by governments and public institutions. Commitment of S$2.38 billion climate-related investments by MAS; Deploying Gprnt.ai in 2023is a digital platform that facilitates how the financial sector and the real economy collect, access, and act on ESG data to support sustainability efforts.
The changing regulatory environment in Singapore is also driving demand for ESG-focused technologies. From financial year 2025, all listed companies in Singapore will be required to make climate-related disclosures in line with IFRS International Sustainability Standards Board (ISSB) standards. The new requirements also apply to unlisted companies, defined as large companies with revenues of at least S$1 billion and assets of S$500 million in 2027.
Home of major fintech companies
Despite continued funding downturns and strategic shifts, Singapore continues to be home to many iconic fintech unicorns, with world-class infrastructure, active regulatory support and strong ties with neighboring countries. China remains an attractive investment destination due to its strong trade relations, the report said.
Of the more than 160 fintech companies surveyed, 16% said their company was valued at more than S$100 million, with payments, lending and Web3 industries leading the list.
Singapore’s current fintech unicorns include Coda, a specialist in payment solutions for digital content providers. Nium, an infrastructure for cross-border payments. Volttech is a platform that connects insurance companies, distributors, and customers of insurance and protection products.
Featured image credit: Edited from freepic
