ASEAN FinTech: Riding the Wave of Innovation
ASEAN’s Financial technology sector is experiencing a surge, fueled by rapid funding growth, the emergence of disruptive technologies, and a favorable macroeconomic climate. A decade-long journey, documented in the latest edition of the FinTech in ASEAN 2024 report: A decade of innovation, highlights this remarkable evolution. As 2015, funding for FinTech in ASEAN has soared over 10 times, significantly outpacing global growth.
While facing recent funding winter challenges, ASEAN’s fintech sector is demonstrating resilience. During the first three quarters of 2024, ASEAN attracted US$1.41 billion in funding, representing 4% of global FinTech investments, marking a notable one percentage point increase year-on-year. Though this represents a slight dip compared to 2023, it signifies a powerful recovery from the 71% drop witnessed between 2022 and 2023.
“FinTechs have evolved from disruptive force to an essential component of financial ecosystems over the past decade.ASEAN’s fintech sector continues to show promise, supported by improving macroenvironment and emergence of advanced technologies,” commented Janet Young, Managing Director and Group Head, Channels & digitalisation and Strategic Communications & Brand, UOB.
The sector has attracted over US$20 billion in investments over the last decade, encompassing nearly 1,500 deals. payment and alternative lending remain dominant, securing more than half of ASEAN’s total funding at US$6.5 billion and US$4.1 billion respectively.
Wong Wanyi, FinTech Leader, PwC Singapore, believes ASEAN’s FinTech sector is steadily gaining long-term investor confidence despite competing with larger economies.She emphasizes, “ASEAN’s FinTech sector is progressively making waves in global waters, demonstrating resilience and adaptability amidst macroeconomic uncertainties. Going forward, the growing impact of quantum computing and GenAI will continue to push new frontiers in financial services, offering faster, more secure, and clever solutions. We are at the epicentre of a conversion, where these advancements will not onyl drive unprecedented growth but also firmly establish ASEAN as a global FinTech innovation leader.”
Singapore continues to reign supreme, attracting over 50% of ASEAN’s funding with US$745 million in 9M24, securing the lion’s share for the 10th consecutive year. Thailand emerged as a strong contender, surpassing indonesia to claim the second spot with US$341 million in funding.singapore’s dominance is fueled by a robust regulatory framework, fostering innovation, and its role as a cross-border collaboration hub. Notable unicorns include Advance Intelligence Group, the parent company of AI-powered platforms, and NIUM, a leading cross-border payments firm.
These mega-deals, combined with a surge in seed and early-stage investments, underscore investor confidence in ASEAN’s fintech ecosystem.ASEAN remains a fertile ground for FinTech startups, promising continued growth in the coming decade.
Looking ahead, the recent Federal reserve interest rate cut in September 2024 could further propel ASEAN’s FinTech sector.Lower interest rates typically stimulate investment, boost valuations, and ultimately create more favorable exit opportunities for startups. Following a similar pattern observed in 2019-2021, a new wave of growth is anticipated.
Beyond macroeconomic factors, ASEAN’s FinTech landscape is poised for a technological revolution driven by GenAI and quantum computing. Global investments in GenAI surged 38% year-on-year in 9M24. this groundbreaking technology holds immense potential for personalized financial advice, fraud detection, and risk management. Quantum computing, capable of solving problems beyond classical computing limitations, promises to revolutionize investments strategies and cybersecurity.
