In 2024, Southeast Asia’s fintech sector showed resilience, defying global funding trends and declining by just 1% year-on-year (YoY).
This is in stark contrast to North America and Europe, where funding has plummeted by more than 30%, according to a new report by UOB, Pwc Singapore and the Singapore FinTech Association (SFA). say.
The 2024 ASEAN FinTech Report examines the state of fintech in the six largest markets of the Association of Southeast Asian Nations (ASEAN-6), highlighting the region’s ability to weather economic headwinds while maintaining stability. .
The report notes that globally, fintech funding will continue its downward trend in 2024, marking the third consecutive year of decline. In the first nine months of 2024 (9th month of 2024), global fintech funding reached USD 39.6 billion, down 28% year-on-year as inflation and geopolitical concerns persisted.
Over the same period, the six ASEAN countries saw a decline of less than 1% year-on-year to US$1.4 billion, demonstrating the region’s resilience. By contrast, funding in North America and Europe, the two largest fintech economies, fell by 35% and 34%, respectively.
Fintech funding in the six ASEAN countries has increased significantly over the past decade, jumping more than six times. Funding reached its peak in 2021, reaching USD 6.4 billion.
Fintech funding in Southeast Asia has raised a cumulative total of USD 20 billion from 2015 to September 2024, excluding undisclosed deals.
Payments lead the financing trend. Singapore maintains leadership
This growth has been driven by the payments and alternative financing sectors, which accounted for more than half of the total financing in the six ASEAN countries over the past decade, at US$6.5 billion and US$4.1 billion, respectively.
In September 2024, payments continued to lead funding transactions, attracting 23% of total fintech funding in ASEAN 6 countries. Blockchain in financial services followed closely, receiving 21% of total funding.
Meanwhile, alternative lending has faced a reversal of fortunes this year, with its funding share falling from 41% in 2023 to 10% in 2024 amid rising interest rates.
In September 2024, Singapore continued to lead in fintech funding, accounting for 53% of fintech funding and 62% of deals across the ASEAN 6 countries. Thailand rose to second place, accounting for 24% of the funding thanks to Ascend Money’s blockbuster US$195 million deal.
Indonesia, which had been in second place for many years, fell to third place this year as its share of the funding pie fell from 36% to 18% due to the lack of mega-deals.
Early-stage startups shine
In 2024, investors will focus on seed and early-stage investments, with more than 60% of total fintech funding in ASEAN 6 countries going to these stages. This trend was driven by large funding rounds, including two mega deals from GuildFi (US$140 million) and Longbridge (US$100 million).
Furthermore, half of the top 10 funding rounds in September 2024 went to early-stage fintech startups, suggesting that investors are willing to bet on innovation at a fundamental level. . This confirmation also shows that ASEAN remains a hotbed of new fintech ideas, which is a sign of its long-term health.
The dynamism of Southeast Asia’s fintech industry is also evidenced by the emergence of unicorns, which reflects the region’s rapid growth and mature digital ecosystem. There are currently 16 fintech unicorns in the region, with Singapore leading the way with six, followed by Indonesia with four.
Almost half of these companies are in the payments sector (nine), followed by alternative lending (three) and blockchain in finance (two) in second and third place.
Sustainability in GenAI, quantum computing and fintech key trends
Turning to emerging trends, the report notes that ASEAN’s fintech industry is embracing cutting-edge technology and sustainability, reflecting the sector’s maturation and marking a new stage of development. I am doing it.
Generative AI (genAI) in particular is poised to significantly reshape the financial ecosystem through enhanced customer experiences, personalized financial advice and services, improved fraud detection and risk management, and automated financial planning. The report states that
Quantum computing, on the other hand, can increase processing power, transform investment strategies, increase security through advanced encryption algorithms, and improve risk analysis.
Finally, green finance has emerged as a major trend in the ASEAN financial ecosystem, driven by both global and regional demand. For example, Singapore has committed to: issue Increase green bonds to S$35 billion by 2030. On the other hand, Malaysia’s SRI Sukuk framework is I’m encouraging Companies that fund environmentally sustainable projects.
Featured image credit: Edited from freepic
