Progressive regulations, strong government support and the availability of talent and capital are cementing Singapore as a fintech hub with a maturing regtech market.
However, the impact of Covid-19 has catalysed the development of its regtech sector, according to a report released today by Ireland’s trade and innovation agency Enterprise Ireland, ranked one of the world’s most active VC investors, including fintech.
The report, entitled The State of Regtech in APAC, provides the most comprehensive, independent analysis available on the adoption of regtech across 10 key APAC markets of Australia, Mainland China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, Thailand, and Vietnam.
Enterprise Ireland commissioned Kapronasia, a leading Asian financial technology market research and consulting firm, to develop the report which identifies the latest opportunities and roadblocks facing regtech players in each of these markets.
It has been forecasted that the global regtech market will grow from USD$6.3 billion in 2020 to USD$16.0 billion by 2025, a rate of over 20% per year, with APAC expected to have the highest growth rate over this period.
The projected growth of the sector is in tandem with the booming fintech scene in the region, particularly in Southeast Asia which saw an estimated USD$1 billion worth of investments in 2019.
As a leading fintech hub in APAC, Singapore’s reputation in financial services is led by the Monetary Authority of Singapore (MAS) which has established a robust and mature regulatory framework that supports industry development and innovation.
Although this top-down approach remains critical to creating a conducive business environment, Covid-19 expedited the growth of the regtech ecosystem in Singapore.
On top of this, the MAS has shown real commitment to accelerating regtech adoption through the Regulatory Technology (RegTech) grant scheme and the Digital Acceleration Grant (DAG) scheme, bolstering Singapore as an attractive market for global regtech players.
Digitalisation also became a widespread necessity for organisations in Singapore, forcing many to move away from legacy systems to adapt and survive the impact of Covid-19 on the market.
Through various government and MAS sponsored grants, regtech solutions were prioritised as an immediate business need as part of a nationwide push for digital transformation.
The willingness of government-led support is also matched by a deep instinct for market resilience in Singapore. While industry consolidation across Singapore’s fintech and regtech sectors was already ongoing prior to the pandemic, the impetus for consolidation became more pronounced over this period.
Covid-19 provided additional incentive for smaller players to partner with established ones to survive the impact of the pandemic. As a result, the regtech sector in Singapore will increasingly sit within a more consolidated spectrum of fintech services as industry players move towards providing end-to-end solutions in the market.
Tiarnan McCaughan
“Singapore is a strategic market globally, not only to Ireland which is home to many regtech specialist companies but to Southeast Asia in particular. A global fintech hub with an extremely sophisticated regulatory regime, Singapore is a key gateway to the region and is often seen as a regulatory model for markets that are looking to drive innovation and regtech growth,”
explained Tiarnan McCaughan, Enterprise Ireland’s Senior Market Advisor (Singapore).
“At Enterprise Ireland, we share the commitment to support the development of a vibrant global industry. This report is a compendium for anyone in the regulatory, risk or compliance functions of any company in the region, as well as for regtech companies which are looking to scale and expand into Singapore and Southeast Asia,”
he added.
Brian Tang, co-chair of the Fintech Association of Hong Kong’s Regtech Committee and co-convener of the APAC RegTech Network that brings together the regtech committees of the fintech associations of Hong Kong, Singapore, Japan and Malaysia said,
Brian Tang
“Regtech is a secret sauce that empowers financial institutions, fintechs, virtual asset service providers and beyond. All such institutions, and their regulators and users, across the Asia-Pacific benefit from innovative, efficient and cost effective regtech solutions to combat financial crime and drive efficiencies and financial inclusion, regardless of origin of such technology solutions.”
He added,
“However, the journey to adoption is certainly not a straightforward one. We congratulate Enterprise Ireland for making this comprehensive report on the state of regtech in APAC publicly available so that regtech solution providers from across the globe, as well as APAC policy makers, can benefit from its findings to help drive further regtech adoption in the region”.
Key Singapore Highlights:
Some insights from Singapore’s overview include:
- Impact of Regulators in Singapore
Tremendous support from the government and the MAS which is actively guiding the development of the fintech ecosystem to ensure the right balance of innovation and risk mitigation. Their proactive efforts in shaping the market has enabled Singapore’s regtech landscape to mature.
- Regtech Development and Innovation
As an advanced regional player with regards to regulation, it is easier to start regtech development in Singapore then to try to implement it almost anywhere else in Asia Pacific.
- Impact of Covid-19
The regtech ecosystem is benefiting from government and MAS sponsored grants. Greater industry consolidation across fintech and regtech can be expected as smaller players and startups prioritise survival.
- Opportunities for Regtech in Singapore
With all that the authorities are doing around e-government, e-KYC, and the national identity scheme, there are opportunities for regtechs to get involved. Regtech entering Singapore market should also be looking at applying regional solutions.
- Changes in Regulation
In the post-Covid era, another regulatory driver for greater regtech uptake will be around senior management liability guidance. The MAS was about to introduce such guidance but this has now been postponed until the end of 2021.
- Roadblocks and Challenges
Talent and its shortage are another area which has seen support from the government. The Singapore government has introduced initiatives focused on retraining the population, evident in the development of a fintech curriculum in universities.
The State of Regtech in APAC report is available for download here.
PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
