Singapore has always been known as the financial hub of Southeast Asia because of the idyllic, opportunity-laden environment it provides. In recent times, with the upsurge in the world of Fintech, the country inevitably has witnessed marvelous evolution in this regard too. Startups and companies from all over the world have been turning to Singapore to find a spot vis-à-vis Fintech incubation or business tie-ups.
Based on a number of reports, Singapore has been ranked as the 4th largest financial hub in the world after New York, London and Tokyo. The economy of the country is thriving. When it comes to Fintech, Singapore’s economy has witnessed even more success. To prosper amidst such high levels of competition and come out as a world leader, requires some prerequisites. The three main elements that have been identified as essential prerequisites to become a Fintech hub are – the number of entrepreneurs initiating startups, an investor’s pool to fund the operations and growth, and education and expertise. These help lay the basic groundwork for an economy to head into the direction of becoming a Fintech leader.
But there is a lot more involved when it comes to being a world leader in Fintech. For the entire ecosystem to flourish, a strong financial backing, combined with expertise in innovation and technology is absolutely imperative. To achieve these, the environment has to have the right kind of opportunities and support. The next section explains these prerequisites in a more detailed manner.
What Does It Take to Become a Fintech Hub?
A report by ICAEW has correctly identified five elements that converge to make a Fintech center. These five elements are:
Knowledge and expertise form the base of success in this domain. The world of Fintech relies heavily on innovation and creativity. When there is adequate education and available information, it leads to opportunities. These opportunities are tapped by budding entrepreneurs, which creates competition, which in turn opens doors to a revolution. Technological and financial expertise and knowledge is essential in reaching the top tier of Fintech.
Capital investments are what breathe life into these innovations and businesses. The world of Fintech is being led by startups, which don’t have adequate funds to create what they aspire. This is where the role of investors comes in. With money flowing in, it is possible to expand operations, hire experts, and grow. Growth of a startup hugely depends on the level of its funding.
A ready market with huge demand and consumption, completes the circle of a startup delivery. The customer is what makes it possible to make this process an ongoing one. This is where the startup can make its choice of whether it intends to cater directly to the end consumer (B2C), or if it intends to partner with other businesses (B2B).
With the growing number of possibilities of innovation, it is crucial for an economy to lay its focus on regulating the operations of all the booming businesses. A competitive market leads to innovation, but if unchecked, it could also lead to several misdemeanors putting the customers or the startups at risk, which could ultimately lead to a downfall.
A befitting government support to manage investments, and the market, is one of the key factors which governs the success of the economy. The layout the government has planned for business operations plays a huge role in determining how all aspects of the economy would function.
These five elements have been identified as the key to becoming a Fintech power. These make a common framework in all the leading economies in the world. The instances of London and Singapore both were analyzed and compared to understand what underpins successful Fintech hubs.
Singapore: An Overview
Singapore, with a population of only around 6 million, has achieved an exemplary feat in the Fintech space. A huge number of Fintech startups have come up in a short span of time, delivering services and products which are in direct competition with their counterparts in bigger economies like the United States and the United Kingdom. Such enablement has brought the world’s focus on this small island city-state, which proudly stands with its head high.
Unlike the counterparts in New York and London, everything about the Fintech space in Singapore is quite different as it is focused overseas.
The country is surrounded by much bigger markets in Southeast Asia, where there is an exponential potential waiting to be tapped. A majority of the startups in Singapore are targeting collaborations with banks in other Asian economies. With this approach, it is aiming to become an indispensable Fintech partner which helps bridge the gap between conventional and digitalized banking.
Singapore’s Fintech sector has been dominated by e-payments and remittances startups being the first Fintech products in general, but now, with new branches in Fintech like cyber security, regulation technology, etc., the shift in focus has started diluting this dominance, giving space to more diversification. This in turn, has led to a substantial increase in investment opportunities.
Overall, the Fintech ecosystem in Singapore has proven itself perfect. Finding and tapping on the right opportunities and making itself an indispensable aid, is what is giving Singapore new heights. With innovation booming inside, and investors pouring in from the outside, Singapore becoming a Fintech magnet only seems predestined.