Investments in Singapore’s FinTech industry hit five-year high in 2021 at US$3.94 bil: KPMG

Investments in Singapore’s FinTech industry hit a five-year high in 2021, with 191 deals valued at US$3.94 billion ($5.3 billion), according to KPMG’s Pulse Fintech 2H2021 report.

This is a 59% surge compared to the transaction value recorded in 2020 at US$2.48 billion across 139 venture capital, private equity and M&A deals.

KPMG attributed the surge to Singapore’s measures to boost the capital market, including the special purpose acquisition company (spac) listing framework introduced to position the country as a “choice location” for fast-growing companies and unicorns to go public in.

Singapore also saw record levels of investments in cryptocurrency and blockchain, with US$1.48 billion transacted across 82 deals in 2021 compared to the US$109.75 million recorded across 26 deals in 2020. The surging investment and deal activity reflect growing recognition for the potential role of crypto and its underlying technologies in modern financial systems, said KPMG.

This trend is mirrored in global investments in the crypto and blockchain space, which rose dramatically to a record high of US$30 billion in 2021, compared to US$5.4 billion in the preceding year. Across Asia Pacific, crypto and blockchain deal value rose to US$3.14 billion last year from US$386.28 million recorded in 2020.

KPMG noted that cryptocurrencies are expected to receive continued attention from regulators in Singapore, as the city-state tries to balance the benefits of financial innovation with any inherent risks associated with the space.

This will include considerations on how infrastructure can be secured to protect the large amount of capital deployed in the crypto market, as service providers aim to scale and innovate to attract more consumers into this market.

“Given how many banks are beginning to see the major limitations inherent in their legacy architecture and technologies, we are also expecting a surge in investment into banking replacements to help them rethink core banking services,” said Anton Ruddenklau, KPMG International global FinTech leader.

Although payments remain the hottest area for global FinTech investment in 2021, Singapore’s payment space fell behind crypto and blockchain investments at US$628.41 million.

There was, however, a nine-fold increase in payments-related deals locally, up from US$60 million in 2020. The payments space is made robust with continued interest in areas like “buy now, pay later”, embedded banking and open banking aligned solutions.

FinTech funding in Asia Pacific grew to US$27.5 billion overall in 2021. Other countries that saw record high FinTech investments last year include India and South Korea at US$7.2 billion and US$3 billion, respectively. — Khairani Afifi Noordin