Singapore, Southeast Asia’s financial hub, has become a magnet for fintech startups. With the huge Asian market close at hand, the city-state has enhanced its strategic importance for businesses with innovative technologies and services for smartphones.
“I invest with Endowus.” Last year, gigantic advertisements from digital wealth management platform Endowus cropped up in downtown Singapore and in mass rapid transit stations, catching the eye of pedestrians. Endowus ads were also seen on TV and video streaming services.
Endowus offers automated financial advice using digital technology. The company builds customized investment portfolios for clients that combine exchange-traded funds and other global financial products according to their asset management plans, taking risk and potential returns into account.
Endowus has developed more than 100 investment products since it was founded in 2017. The company’s selling point is its low commission fees, just 0.4% of employed assets per year, much lower than the average commission of 1.75% charged by investment managers in Singapore.
“It is not possible to do at the same level of cost, even if you are at the largest private banks, or if you are another wealth tech player,” Endowus CEO Gregory Van said.
Endowus’ assets under management topped SGD 1 billion (USD 737.7 million) in July 2020, just 20 months after the launch of the service. The company has managed assets totaling SGD 1.5 billion as of November 2021.
Endowus has drawn the attention of global investors. Its shareholders include Swiss bank UBS, Japan’s Z Holdings, and EDBI, the investment arm of Singapore’s Economic Development Board. The company raised a total of SGD 67 million last year, which will be spent to branch out in Southeast Asia.
“Endowus is giving, providing that framework to everyone and making [investment] possible for people because I really think that it will help to improve people’s quality of life,” said Van.
Fintech startups are cropping up in Singapore. According to international accountancy KPMG, investments in Singapore’s fintech sector climbed 59% to reach USD 3.94 billion in 2021. The number of investments in the fintech sector also rose rapidly, from 100 in 2019 to 139 in 2020 and 191 in 2021.
The COVID-19 pandemic has fostered the growth of online payments as more consumers shop online. At the same time, Singapore-based tech unicorn Grab and other tech startups have developed super apps, which make financial and other services available on smartphones.
Better financial literacy among consumers and the rapid development of digital finance technology have created synergy, providing a springboard for fintech startups’ rapid growth.
Singapore-based private market exchange ADDX offers a venue for new financial transactions in the digital space. ADDX is rushing to create a mechanism to allow retail investors to trade financial products using blockchain. The company plans to create digital assets backed by private equity funds and venture capital funds that have up to now been unfamiliar with retail investors, dividing digital assets into small lots so that retail investors can trade them on the ADDX market.
ICHX Tech, which operates ADDX, secured funding from Japan’s Tokai Tokyo Financial Holdings and other investors in November last year. The company’s next target is Japan’s security tokens market.
Fintech is a hot topic in environmental, social, and governance (ESG) investing as well. Singapore-based fintech company Hashstacs created a blockchain-based platform called ESG Registry that enables farms to register fair trade certificates, office building operators to register their electricity use, and logistics companies to register data on their carbon dioxide emissions.
Hashstacs targets both financial institutions that want to expand their ESG-related investment and lending, and companies that hope to secure these investments and loans.
“We hope to overcome both problems by providing an industrywide library, storing records of ESG data and certification, leveraging on blockchain technology,” said Benjamin Soh, managing director of Hashstacs.
TranSwap is a cross-border payment platform for businesses and individuals that allows people to send money to a country where they have no bank account more cheaply than by using a bank. The TranSwap platform lets customers exchange 120 currencies quickly and make payments in more than 180 countries.
Founded in 2015, TranSwap has obtained operating licenses in Singapore, Hong Kong, the UK, and elsewhere. The company’s trading volume jumped fourfold in 2021 from the previous year.
“TranSwap’s fees are very competitive. But more importantly, our current products and solutions will help our customers to improve their revenue and provide value to their customers,” said Benjamin Wong, the company’s co-founder and CEO.
There are also moves among new financial services providers to connect to one another to build fintech ecosystems. Socash, which offers a QR code payments platform, is a case in point. Previously, the company did business mainly with large financial institutions, such as ICBC, Standard Chartered Bank, and HSBC. But now, e-commerce companies and digital businesses are conducting more transactions with it.
“Over the last two years, you know, that mindset has changed and an increasing number of retailers, you know, now require QR payments, credit card acceptance. So the business model has changed,” Socash CEO Hari Sivan said.
Creating a fintech ecosystem also requires companies to provide physical and financial support to the industry. Grit Search, which helps companies find the tech talent they need, is one such company.
“The only conventional approach is to hire only commoditized technicians,” Grit CEO Paul Endacott said. Many companies are seeking specialists in cryptocurrencies and “buy now, pay later” service, according to a Grit Search representative.
Choco Up, based in Singapore and Hong Kong, provides capital to fintech startups, which often find it difficult to secure funds from venture capital firms or banks. Choco Up swiftly provides hundreds of thousands of dollars for day-to-day operations to these companies, such as funds for marketing campaigns, using artificial intelligence to screen their creditworthiness.
Silicon Valley’s strength lies in having developed an ecosystem in which those who led successful startups moved on to create other startups that nurtured new technologies. In Southeast Asia, too, large startups, including Grab, Indonesian e-commerce service Tokopedia, and ride-hailing company Gojek, have either listed their shares or have plans to do so.
“We have seen a lot of high-quality talent coming out of these companies and starting new companies,” said Akshay Bhushan, a partner at Lightspeed Venture Partners. “And very similar to what we felt in India when Flipkart exited, and we saw the ‘Flipkart mafia’ come out and start companies, or similarly in the US, the ‘PayPal mafia.'”