Financial technology (fintech) companies in Singapore raked in US$735mil (S$1bil) in investments in the first nine months of 2019, according to a report by Accenture released on Tue (16 Oct).
The total value of investments marked a 69 per cent jump from the same period the previous year, from US$435mil to US$735 mil.
The number of fintech investments made, however, saw a 29 per cent decrease from 133 to 94 compared to the same period in the previous year as investors made larger bets into fewer deals as startups grew their business, according to Accenture.
Fintech companies are defined as those that offer technologies for banking and corporate finance, capital markets, financial data analytics, insurance, payments and personal financial management, according to Accenture.
Much of the investments raised by Singapore’s fintech ventures in the first nine months of this year entails investments in payments startups and those in lending, making up 34 per cent and 20 percent of the total respectively.
Insurtechs comprise 17 per cent of the total investments with almost four times the value from the same period last year, from US$35mil to US$128mil.
However, angel and seed funding that focuses on the earliest stage of capital raising for startups just getting their business off the ground dropped 56 per cent to US$54 mil, and the number of those deals declined 46 per cent to 29.
Series funding, which typically aims at companies seeking to expand their business using external capital as they mature, jumped 66 per cent to US$442 mil, although the number of deals was relatively unchanged at 44 versus 43 in the first nine months of last year.
In analysing fintech investment trends in Singapore in the first nine months of this year, Accenture Research collaborated with Monetary Authority of Singapore (MAS) to study fintech investment data from global venture-finance data and analytics providers CB Insights, Pitchbook and Tracxn.
The analysis included financing activity from venture-capital and private-equity firms, corporations and corporate venture-capital divisions, hedge funds, accelerators, and government-backed funds.
The investment data ranged from 2015 through the first nine months of 2019 and included equity and non-equity financing.
Divyesh Vithlani, a managing director at Accenture and head of Financial Services in the ASEAN region, said: “As we’ve seen in other parts of the world, fundraising is shifting to support the scaling up of challenger and collaborative fintech, which will cause lumpiness in some rounds as the market becomes more mature.”
Vithlani added that the “steady flow of funds” into Singapore’s fintech industry demonstrates “investors’ confidence in the future growth potential of the fintech industry in Singapore”.
“The upcoming unveiling of virtual banking licenses will bring even more opportunities for fintech startups and traditional banks to partner and cooperate,” he added.
Sopnendu Mohanty, chief fintech officer of the Monetary Authority of Singapore, said in light of the report’s findings: “Crossing a billion-Singapore-dollar investment threshold is recognition from investors around the world of the potential of Singapore’s fintech ecosystem and the outlook for digital financial services not just in Singapore, but also in Southeast Asia.”
“These comprehensive figures show that fintech investment in Singapore has increased nearly six-fold year-on-year from 2015. It’s encouraging to see the local startups financing their global growth from Singapore. Additionally, several global fintech companies with regional headquarters in Singapore have recently raised sizeable funds to fuel their Asian expansion,” Mohanty added.
Singapore facing fintech talent deficit; firms likely to train local talent while actively pursuing skilled foreign talent
Despite the increased jump in fintech investments, however, Singapore is facing a significant shortage in fintech talent.
ASEAN Today reported that 94 per cent of fintech companies surveyed by recruitment services firm Michael Page have expressed apprehension regarding the shortage, particularly in areas such as software engineering, sales and business development.
There is also surplus of candidates with higher education qualifications but a shortage of talent with technical expertise, ASEAN Today reported.
President of Singapore Fintech Association Chia Hock Lai told ASEAN Today in an interview, however, that in the “shorter-term there is indeed a tech talent shortage, but not as serious as reported”.
Highlighting that Singapore “as a leading regional financial centre has a lot of financial talents”, Chia said that the [tech] shortage – where the problem lies – is “a global one, not just in Singapore”.
Hiring managers in Silicon Valley are also struggling with talent development, retention and recruitment, ASEAN Today observed.
Chia also said that as “many fintech companies based in Singapore [have] offices around the region”, it is possible for “some software development will be done offshore [in destinations] such as Vietnam”.
However, Chia acknowledged that many would rather hire Singaporeans “if cost and availability of tech talent is not an issue”, as seen in a report by Michael Page, which found that 63 per cent of fintech employees prefer local talent.
“Fintech companies can consider the various government schemes… to reskill or upskill [the] existing workforce,” he said, adding that “significant subsidies” are available “in terms of training fees and salary support”.
Consequently, ASEAN Today reported that fintech firms will likely pursue “a two-pronged approach”, namely to train local talent for “some positions while actively pursuing skilled foreign talent”.
Local universities and other tertiary institutions have also incorporated fintech modules into their syllabi.
Chia added that the Institute of Higher Learning is “ramping up tech talents [programmes]” as a “medium to longer-term” measure.
Odisha-born MAS chief fintech officer Sopnendu Mohanty previously under fire for alleged conflict of interest in appointment as state govt fintech advisor
Mohanty had come under fire by netizens last month for his alleged appointment as an advisor of digital and financial technology to the Indian state government of Odisha, which entails giving suggestions to the various ministers in the state as well as coordinating with the chief minister’s office, according to a report by Times of India.
The Times of India report also stated that Odisha-born Mohanty will “enjoy the rank and status of a minister of state” as a result of his appointment, in addition to playing a key role in preparing annual budgets for the state.
TOC previously reported that it is unclear at this point if Mohanty remains an Indian national or is now a Singapore citizen.
In response to an email sent by netizen Jeremy Cho regarding the news of Mohanty’s appointment, which was shared with TOC, Sherry Theng from MAS’ Corporate Communications Division that Mohanty was “not appointed as a Minister of State and is not part of the Odisha Government”.
Theng added that Mohanty’s appointment as financial advisor to the Odisha government was undertaken in “his personal capacity”, and that he will not “draw any compensation”.
She also maintained that Mohanty’s appointment as financial advisor to the Odisha government does “not conflict with his role as the Chief FinTech Officer in the Monetary Authority of Singapore”.
“As Chief FinTech Officer in MAS, Mr Mohanty’s mandate is to help develop the FinTech sector in Singapore and help create new jobs in this space. He has played a key role in establishing Singapore as a leading global FinTech hub,” she added.
In response, Cho questioned as to how there fails to be a conflict of interest in Mohanty’s position, given his seniority in MAS.
“He is advising a foreign government who is according him elevated status. That is gratification, even if it isn’t monetary. Is he going to account for every meals, car rides and gifts he get in his capacity? And he is such a senior figure in MAS, how sure are you he is not sharing (Singapore) state secrets?
“And what do you mean in his personal capacity? He is a full time employee of MAS. Where does he have (the) free time to advise a foreign government? Does he take leaves to do this ‘personal undertaking’. Does he travel on MAS expense? Does he do it all exclusively on weekends?
“You stated his job is to support Singapore’s industry not India’s. So why was he allowed to undertake this role? Are you sure he won’t favour vendors from India?” Cho charged.
MAS has yet to respond to Cho’s statements as of press time.
A petition calling for accountability from MAS regarding Mohanty’s position was started by an individual called “Chee Johnson” alongside two other people, and has gained 10 out of the targeted 100 signatories as of press time.
“That a foreign citizen is allowed to take up a senior government position then double hat in a foreign government is unconscionable. There are no safeguards, and clearly a lack of dedication of service to the people of Singapore.
“We demand an investigation into the appointment in India, who approved it, who approved Mr Mohanty’s hiring in MAS and why there is lack of basic sense of accountability to Singapore in MAS,” the statement read.