Since fintech's inception more than a decade ago, Singapore has been an aspiring hub for the sector in Asia. The Monetary Authority of Singapore (MAS) has generally been supportive of fintech's development, while urging startups to cooperate with incumbents rather than merely disrupt them.
The Business Times noted in an August report that five of Singapore's largest fintech deals ever took place in the first half of the year. Those include cloud company Deskera raising US$100 million in May, financial product marketplace GoBear's US$80 million fundraising round (also in May), and cashback platform Shopback closing a $45 million equity-funding round in April.
Divyesh Vithlani, a managing director at Accenture and Asean Financial Services practice lead, said in an August research report: "There's a lot brewing in the Singapore fintech ecosystem, and this steady flow of funds shows investors' confidence in the industry’s future growth potential."
Vithlani added that Singapore's forthcoming virtual banking licenses would attract an additional wave of investment. In June, the MAS announced it would issue up to five virtual bank licenses and in September the regulator said that it would begin accepting applications with a deadline of year end. The MAS's moved to greenlight internet banks after Hong Kong issued eight internet banking licenses earlier this year.
Going forward, the unrest roiling Hong Kong will likely result in more fintech investment going to Singapore. The two cities have been vying for years to serve as Asia's preeminent fintech hub. Hong Kong has always been a bigger hub for traditional finance, and some observers had expected it would naturally beat out Singapore in fintech too.
Yet, investors eschew political instability for the risk it creates. Now that such instability is a part of everyday life in Hong Kong, Singapore looks better than ever. A recent survey of 120 companies by the American Chamber of Commerce in Hong Kong found that 23% of companies with a Hong Kong office may shift business functions from the city. 90% of them say Singapore is their first choice.
In an October interview with Bloomberg, MAS managing director Ravi Menon said that Singapore's banks have received more inquiries recently about re-allocation of assets. Goldman Sachs estimates that up to $4 billion in deposits moved from Hong Kong to Singapore between June and August.