This article was first published on December 8, 2020.
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The four key success factors for a strong FinTech hub
The growth trajectory of Singapore’s FinTech industry has been impressive to date. FinTech funding has risen steadily to fuel this growth, exhibiting resilience amidst the pandemic. Moreover, the concentration of FinTechs in Singapore and their diversity in terms of their business models demonstrate that Singapore is an attractive FinTech centre.
To establish Singapore as a regional FinTech hub that stays on the path to be a global hub, we recommend the following areas of focus:
A startup-focused investor ecosystem: Singapore has taken the lead in FinTech funding in Southeast Asia, and government-linked funds have played an important role in kickstarting the FinTech ecosystem, particularly in their support of earlier-stage startups. As the sector matures in the coming few years, later-stage funding will also develop. To support this growth, Singapore should continue to attract global investors to the region. Government-linked capital providers could also play a key role in this endeavour.
Progressive regulatory support: Strong government support with an established regulatory framework has led Singapore to be an attractive location for FinTechs. Coupled with progressive attitudes towards FinTechs and the introduction of new guidelines to provide clarity, regulators have helped encourage innovation in the sector. Moving forward, the government should continue its progressive attitude towards regulation and ensure regulations remain current. At the same time, it should continue to open up the financial services infrastructure to FinTechs to level the playing field, and seek to harmonise standards across the region.
Regional access to customers and partners: Singapore is well-positioned to be a regional FinTech hub, as it provides access to a wide pool of customers in Southeast Asia and an extensive network of partners that have their regional headquarters in Singapore. Partnerships are especially important as attitudes regarding B2C versus B2B business models in Southeast Asia have evolved with larger players dominating the B2C market. B2B FinTechs have become more prevalent with an increased focus on a multi-country strategy. By leveraging on cross-regional alliances, such as FinTech bridges, B2B FinTechs would also be able to achieve scale and expand to neighbouring markets with greater ease.
Business and Tech talent pool: Singapore has a deep existing talent pool as a result of the initiatives implemented over the past five years to incorporate interdisciplinary skillsets into the curricula for higher education and provide upskill training courses for the existing workforce. However, talent remains a top priority for FinTechs and needs continued investment. To create a sustainable talent pipeline, focusing on fostering a culture of innovation could provide benefits through specific actions, such as overseas secondment.
The growth of FinTechs is expected to accelerate as a result of the digital transformation brought about by the COVID-19 pandemic, a negative social situation that has nevertheless benefitted many FinTechs in terms of adoption. As the FinTech industry continues to evolve, key factors that have contributed to Singapore’s success to date may need to be adapted to newer trends for the country’s FinTech industry to stay relevant.