The rise of financial technology, or fintech, is changing how people do business. Singapore has strategically positioned itself to become the leader in the global fintech industry. Many analysts expected this thrust from the country as if it was a natural progression. For several years, Singapore diligently worked on building a strong technology capability with its robust regulatory framework and highly educated workforce. Despite being a small region, Singapore has made its impact felt across the world with its forward-facing policies and strict implementation of the law.
Singapore leads Southeast Asia with regard to the total investment dollars on fintech. The country, aside from strong support from the government, also benefits from organisations such as the Singapore Fintech Association that supports growth in the fintech sector. It is also noteworthy that universities and tertiary institutions in the country incorporated fintech modules into their curriculum. The country is also lending its knowledge with other countries to support the growth of the fintech industry further.
Why is Singapore leading the global fintech industry? Here are some concrete reasons:
Thrust Towards Building a Smart Nation
The country spearheaded the creation of a smart nation. In 2014, PM Lee Hsien Loong announced to make the state the first smart nation in the world by 2030. To achieve this, the Monetary Authority of Singapore, along with other stakeholders, is working on building a smart financial centre. This centre will primarily use technology to encourage efficient opportunities for the economy while enhancing the standard of living.
One of the significant products to come out of this project is the creation of the Financial Sector Technology and Innovation. This initiative aims to provide as much as $168 million by 2021 to invigorate more financial institutions to work with fintech startups.
Startups Receiving Tons of Support
The country is home to more than 400 fintech companies, of this number six Singaporean countries made the 2018 KPMG Fintech 100 list. Grab, a leading ride-hailing app made it to the top 50, with its innovative GrabPay e-wallet widely used by stakeholders.
Startups in Singapore are leading the innovation by offering different solutions to many of the challenges commonly faced in various industries. These solutions include digitisation of the insurance paperwork, reduced cross-country money transfer costs, and digital fundraising platforms.
This strong support that startups get has already earned Singapore the recognition it deserves. It has previously received an above-average ranking from the Ernst & Young report for the UK Treasury. The report placed Singapore as the fourth most important region in the global fintech industry, besting other emerging fintech regions such as Australia, Germany, and Hong Kong. The report claims that Singapore is Asia’s preferred gateway to the Asian market. Due to this, the country has seen more than 200 fintech firms starting their operations in the country in just two years, making it the fastest in the whole of Asia.
Robust Regulatory Framework
Singapore does not have any specified fintech regulations in place. However, most fintech companies with operation in the country gall under the different and current regulatory frameworks already in place in the country, particularly for financial services. Some of these are the Securities and Futures Act, the Banking Act, the Insurance Act, the Finance Companies Act, and the Business Trusts Act.
Singapore also has reliable data protection and cybersecurity law that protects the interests of fintech enterprises in the country. The Personal Data Protection Act 2012 includes the rules of personal data protection while the Cybersecurity Act penalises individuals or companies proven to cause cyber threats. The country also has plans to develop additional cybersecurity measures to combat the threat of cybercrime further.
Another commendable aspect of Singapore in terms of fintech development is its intellectual property. For years, it has ranked above average in the world. The government also announced the launch of the FinTech Fast Track initiative that aims to accelerate patent applications so it would be easier to market their innovations.
Plenty of Networking Opportunities
The country hosts an annual Singapore FinTech Festival. This highly attended event brings together the best of the best in the technology, banking, and cybersecurity sectors. It is also an avenue where innovations become available for stakeholders. This year, the festival will take place on November 11-15.
The fintech sector in Singapore receives enormous funding. In 2017, the industry received as much as $229.10 million worth of investment, the largest in a single year. This funding came even though there was a general decline in FinTech funding in Asia. Most of the fintech funding comes from angel investors, government entities, and venture capital corporations. Some of the notable investors in the country include Singtel Innov8, Sequoia Capital, Temasek, and GIC.
Home to Top Fintech Providers
Singapore is an investment hub, with most of the businesses geared towards crowdfunding, wealth technology, lending, remittances, and insurtech – all of these are fintech companies. As much as 26.8% of the fintech sector come from payment and remittance companies.
The gross domestic product per capita of Singapore is equal to US$52,960. In addition to this, economic strength is a world-class infrastructure and excellent internet connectivity. These factors are key contributors to the country’s growth as a global fintech hub. It attracts tons of investors and workforce. When this happens, more and more people are willing to move into the country, which will fuel more investments from multinational companies.
Additionally, the absence of capital gains tax in the country further fuels many entrepreneurs to start their business in Singapore.
Singapore, in its heavily grounded stance on technological advancement, has successfully placed itself as one of the best in the fintech industry. Thanks to its strict policies, effective tax incentives, and robust fintech policy initiatives, it looks like they are on track on their goal to become the global leader in the fintech industry. Singapore is a startup hub that boasts of a good talent pool, strong financial background, and capitalisation for investments make it an ideal market for up and coming fintech startups.