In 2024, Southeast Asia’s fintech sector has demonstrated resilience, defying global funding trends with only a marginal decline of 1% year-on-year (yoy).
This figure stands in stark contrast to North America and Europe, where funding has fallen by more than 30%, according to a new report from UOB, Pwc Singapore and the Singapore Fintech Association (SFA). said.
The 2024 Fintech in ASEAN report, which examines the fintech landscape in the six largest markets of the Association of Southeast Asian Nations (ASEAN-6), highlights the region’s ability to weather the winds contrary economic conditions while maintaining stability.
It notes that globally, fintech funding continued its downward trajectory in 2024, declining for the third consecutive year. In the first nine months of 2024 (9M 2024), global fintech funding reached US$39.6 billion, down 28% year-on-year, as inflation and geopolitical concerns persisted.
ASEAN-6 countries saw an annual decline of less than 1% to $1.4 billion during the same period, demonstrating the region’s resilience. By comparison, funding in North America and Europe, the two largest economic zones for fintech, fell 35% and 34%, respectively.
ASEAN-6 fintech funding has grown significantly over the past decade, growing more than six-fold. Funding peaked in 2021, reaching $6.4 billion.
In total, fintech funding in Southeast Asia attracted $20 billion between 2015 and 9 months 2024, excluding undisclosed deals.
Payment leads financing trends; Singapore maintains its leadership
This growth was driven by the payments and alternative lending verticals, which accounted for more than half of ASEAN-6’s total financing over the past decade, at $6.5 billion and $4.1 billion, respectively. billion dollars.
In the first 9 months of 2024, payments continued to dominate financing deals, attracting 23% of total fintech financing in ASEAN-6. Blockchain in financial services followed closely, receiving 21% of total funding.
Alternative loans, for their part, have experienced a reversal of fortune this year, their share of financing falling from 41% in 2023 to 10% in 2024 in a context of rising interest rates.
In the first 9 months of 2024, Singapore continued to lead in fintech financing, accounting for 53% of the fintech financing amount and 62% of the number of transactions in ASEAN-6. Thailand rose to second place, accounting for 24% of funding thanks to Ascend Money’s $195 million mega-deal.
Indonesia, still in second place, fell to third place this year as the country saw its share of the financing pie fall from 36% to 18%, without mega-deals.
Start-ups shine
In 2024, investors have focused on seed and early-stage investments, with more than 60% of total fintech funding in ASEAN-6 directed towards these stages. This trend has been fueled by large funding rounds, including the two mega-deals of GuildFi ($140 million) and Longbridge ($100 million).
Furthermore, half of the top ten funding rounds in 9M 2024 went to early-stage fintech startups, suggesting that investors are willing to bet on innovation at a fundamental level. This support also shows that ASEAN remains fertile ground for new fintech ideas, which is a sign of long-term health.
The dynamism of Southeast Asia’s fintech sector is also highlighted by the emergence of unicorns, which reflect the region’s rapid growth and the maturation of its digital ecosystem. Currently, the region has 16 fintech unicorns, with Singapore leading the pack with six, followed by Indonesia with four.
Nearly half of these companies fall into the payments category (9), followed by alternative lending (3) and blockchain in finance (2) in second and third place.
GenAI, quantum computing and sustainability among top fintech trends
Looking at emerging trends, the report notes that ASEAN’s fintech industry is embracing cutting-edge technologies and sustainability, reflecting a maturation of the sector and signaling a new phase of development.
Generative AI (genAI), in particular, is poised to significantly reshape the financial ecosystem through enhanced customer experience, personalized financial advice and services, improved fraud detection and risk management, as well as automated financial planning, the report says.
Quantum computing, on the other hand, offers high processing power, transforming investment strategies, enhancing security with advanced cryptography algorithms, and improving risk analysis.
Finally, green finance is emerging as a key trend in the ASEAN financial ecosystem, driven by global and local demand. For example, Singapore has committed to emit to S$35 billion in green bonds by 2030. Malaysia’s SRI Sukuk framework, meanwhile, is encouraging companies to finance ecologically sustainable projects.
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