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Asean FinTech sector resilient at US$4.3 bil for 2022: UOB, PwC and SFA report

Chloe Lim
Chloe Lim • 5 min read
Asean FinTech sector resilient at US$4.3 bil for 2022: UOB, PwC and SFA report
Singapore and Indonesia were noted in the report to have secured the lion’s share of FinTech funding out of the six largest Asean economies, mainly driven by 10 mega deals that accounted for 37% of all funding in Asean.
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According to the “FinTech in Asean 2022” report by United Overseas Bank (UOB), PricewaterhouseCoopers (PwC) Singapore and the Singapore FinTech Association (SFA), Asean remains attractive for FinTech funding investments amidst external pressures, with Singapore and Indonesia taking the lead in accounting for over 75% of the region’s total fintech funding.

The report for this year surveyed over 4,000 respondents, in addition to engaging in conversations with industry leaders to find out how consumers are warming up to leading new areas such as embedded finance, and how companies and fintechs can tap into the sector.

In the first three quarters of this year, investments in Asean’s FinTech sector garnered US$4.3 billion ($6 billion), 7% out of the total US$63.5 billion poured into FinTech globally during the same period, up from 2% in 2018.

The average deal size in Asean’s FinTech sector increased to US$26.5 million in 2022 from US$23 million in 2021, despite a lower number of deals achieved.

Moreover, funding into late-stage FinTechs made up 54% of the total investments in the first nine months of 2022, up from 43% last year, as investors were observed to grow more selective while placing a greater focus on FinTechs that have a clearer pathway towards profitability and sound financial management.

In particular, Singapore and Indonesia were noted in the report to have secured the lion’s share of FinTech funding out of the six largest Asean economies, mainly driven by 10 mega deals that accounted for 37% of all funding in Asean.

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The report states that Singapore-based FinTech firms continued to attract the most deals in Asean, securing 55% of the total 163 deals in the region, amounting to US$1.8 billion in funding and 43% of total funding in Asean. Indonesia also obtained a 11% gain in its FinTech funding share over the last year, with 25% of its total deals amounting to US$1.4 billion.

“Despite the global uncertainty, it's clear that Asean continues to be a bright spot for funding investments,” says Shadab Taiyabi, president of the SFA. “We are heartened to see the resilience within the FinTech ecosystem as players continue to flourish across sub-sectors like payments and alternative lending.”

In the Asean region, payments and alternative lending continue to attract the most amount of funding according to the report, amounting to US$1.9 billion and US$506 million respectively in the first nine months of 2022.

See also: Staying resilient, viable, and valuable

At the same time, cryptocurrency firms are now the third most funded FinTech category in the region with US$461 million in funding, despite the broader crypto market’s volatile performance this year. There were eight mega deals from these categories worth close to US$2 billion in total, accounting for 46% of all FinTech funding in Asean.

However, the report also notes that the number of new FinTech firms set up across Asean has dropped to an all-time low of 127 companies this year.

Janet Young, managing director and group head of Channels and Digitalisation, and Strategic Communications and Brand at UOB points out that this is a worrying figure, as it has a significant impact on the future of the space in Asean. “This is a leading indicator that without enough [new] startups in the space, it will be difficult to achieve different rounds of funding with venture capitals (VCs) moving forward,” says Young at the report’s launch at the Singapore Fintech Festival 2022 (SFF).

“It might be a good time to start and stimulate more ideas towards areas [in FinTech] with more growth opportunities,” she adds.

Embedded finance takes lead

In recent times, more and more consumers in Asean have become familiar and comfortable with using embedded finance services, propelling more non-financial companies to find ways to embed financial services within their apps, such as including in-app payments, and lending.

Through the UOB Asean Consumer Sentiment Study (ACSS) 2022 and survey featured in the report, Asean consumers have a high awareness of embedded financial services, with an average of 81% of survey respondents knowing of apps with built-in financial services.

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Image: FinTech in Asean 2022 report

70% of the survey respondents reported using applications with a form of financial service that has been embedded into the platform, with Thailand and Vietnam leading the region at 83%.

Singapore’s comparatively lower usage of 55% may be due to the population’s financial needs being well-served by a mature financial ecosystem and products like credit cards, notes the report.

Nevertheless, nearly every three in four of respondents who use apps with embedded finance were noted to use them at least once a week, demonstrating the potential of such apps to increase user engagement.

Moving forward, there continues to be work to be done in the embedded finance space, according to Thio Boon Kiat, group CEO of UOB Asset Management. “On the demand side (ie. customers), many are still getting used to [managing their finances] on an advanced financial platform,” says Thio on a panel discussion at the report launch at SFF. “As such, we need to continue working on educating them, engaging with them and changing their habits to actually be good users of financial technology on these platforms.”

With regards to supply-side partnerships, Thio shares that “synergistic collaboration” is key for long-term success in the space. “In my view, the intelligent use of data to make sure that we deliver the right product to the right customer at the right time is crucial,” says Thio. “We continue to search for ways to bring better value to customers on a targeted basis.”

“Only with these ways can we truly embed embedded finance in the right landscape,” he adds.

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