With key innovation areas such as investment and wealth management, compliance, cyber security and robo advisors, here are five reasons why Singapore is the best place to launch your fintech start-up.The government support
Planning ahead, the Monetary Authority of Singapore (MAS) – the central bank of Singapore – has earmarked S$225 million for fintech development for the next five years. These funds will be used for the establishment of innovation centres and for the development of institution-level and industry-wide projects. There is also the Financial Sector Technology and Innovation Proof of Concept scheme, which seeks to foster experimentation and to fast-track any innovative technologies in the financial services sector. In terms of grants and schemes, startups can have several options.
Administered by SPRING Singapore, there is Startup SG Accelerator, which helps incubators and accelerators secure opportunities for their startups by means of programmes, mentorship, and use of resources. There is also the Startup SG Equity whereby the government and third party investors will co-invest in start-ups; this shows intellectual property and global market potential. To entrepreneurs who are establishing startups for the first time, SPRING Singapore offers the Startup SG Founder programme which involves mentorship and startup capital grants of up to S$30,000 through matching S$3 to every S$1 raised. For more technical-oriented startups, the Startup SG Tech gives entrepreneurs the opportunity to submit their Proofs of Concept or Proofs of Value to secure grants.
The fintech regulation
Singapore boasts a strong legal framework based on British common law. In the Intellectual Property area, Singapore’s regime has consistently been ranked as one of the best in the world. With regards to fintech, there are regulations on payments and guidelines on secure cloud computing. It has been noted that MAS will make continuous risk assessment and evaluation in order to see whether regulations on fintech will need to be made. In the meantime, MAS has introduced the fintech regulatory sandbox which allows financial institutions and fintech startups to work on products and services within a clear space and time. This will allow for appropriate protections in the event of failure, and to ensure the security and trustworthiness of the financial system.
The Singapore ecosystem
Singapore is home to over 400 fintech companies which offer various products and services across the value chain, ranging from payments to fraud monitoring. For instance, there is M-Daq, a Singaporean trading service which provides a platform to price and trade any exchange-traded products in more than one currency. M-Daq was the top-funded fintech startup in Singapore when it received US$87 million in series C round funding in 2015.
The other top fintech companies present in the Lion City include Crowdonomic, Dragon Wealth, and MoolahSense. In addition to fintech companies, there are over 20 fintech innovation labs or research centres in Singapore that have been set up by global banks and insurance companies. These include the Allianz Digital Labs, Aviva Digital Garage, HSBC’s Innovation Lab, and Lattice 80.
The funding landscape
The start-up funding landscape in Singapore comes from angel, Venture Capital (VC), corporate venture divisions, and government entities. In terms of VC funding, this amounted to US$725.3 million with 26 deals recorded in the second quarter of 2017. This figure marked the second-highest in Singapore in the past five and a half years.
The key investors in the Singapore startup landscape include 500 Startups, Golden Gate Ventures, Sequoia Capital, Singtel Innov8, and government entities such as GIC and Temasek. With the aim of boosting the funding landscape, the MAS released the Venture Capital Fund Managers Regulatory Regime which simplify and shorten the authorization procedure for VC managers. Under this regime, MAS will no longer need VC managers to have directors and representatives to hold at least five years of related experience in fund management, and to be subjected to the same capital requirements and business conduct rules as other fund managers.
The talent base
Singapore is well-known to groom a highly-educated workforce, producing talented graduates from its educational institutions. The Lion City has also typically attracted qualified talent from across the world. With regards to fintech, the MAS has partnered with Singapore’s five polytechnics to equip students with the necessary skills to work in the fintech industry. At the university level, there are fintech courses and internship opportunities available to students. More recently, in mid-November, a TechSkills Accelerators Fintech Collective (TeSA Fintech Collective) was launched to nurture industry-ready professionals to work in the fintech industry.
The TeSA Fintech Collective comprises the six Singapore local universities, as well as the Association of Banks in Singapore, the General Insurance Association of Singapore, the Infocomm Media Development Authority, the Investment Management Association of Singapore, the Life Insurance Association of Singapore, MAS, SkillsFuture Singapore and the Singapore Fintech Association.