Recently, Robocash Group published a study which reveals that from 2000 to 2022, the number of fintech companies in South and Southeast Asia was growing fast. Growth in key sectors, including Payments and transfers, e-wallets, digital banking and alternative lending, has been fueled by increasing levels of private equity raised through funding rounds.
Statistics on funding attracted by fintech in SEA this year show that investment priorities are changing. In particular, such sectors as Insurance Tech, Health Tech and Marketing Tech are coming to the fore. Data from the same source, which shows the distribution of investments by sector and by year, also demonstrates the growth of these segments in 2023.
So, what does it mean?
First, this is a signal that the basic segments of the fintech market are becoming saturated. Although the potential of e-wallets, digital payments, and digital banking in the region is far from being realised, the degree of competition in these sectors is already quite high.
Also, the natural market expansion can be constrained by regulatory restrictions — as in the case of moratoriums on new digital banks and e-money providers in the Philippines. On the other hand, regional fintech remains highly attractive for investments. That is why highly promising sectors, which are still forming their full potential, come to the fore.
What exactly attracts investors?
To have a better understanding of the current trends in regional fintech investments, let’s take a closer look at them.
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The aforementioned surge of interest in health tech is confirmed by large transactions — for example, US$33.5 million attracted in series B by the Vietnamese company BuyMed. The company owns a B2B platform that connects pharmaceutical manufacturers, distributors and clinics. US-Singapore company Holmusk also raised US$45 million in round B. Holmusk runs NeuroBlu, a clinical behavioural health database, which is used in drug development.
Another example is the Singaporean startup Qritive, which raised US$7.5 mln. The company uses artificial intelligence to detect pathologies such as cancer. As we can see, the range of activities is quite diverse, which reflects the growing popularity of the segment and big prospects for its rapid development.
Many companies attract investments to expand into new markets. These include Roojai (insurance, Thailand), Qoala (insurance, Indonesia), Advance (Philippines, salary payments), Pilon (Singapore, cloud financial systems), Jenfi (Singapore, digital startup investments), bolttech (Singapore, insurance), BetterTradeOff (Singapore, financial advisory), CrediLinq.Ai (Singapore, financial services), Qritive (Singapore, healthcare).
As we can see, there is increasing popularity of insurtech. Also, some of these companies are going to expand their presence not only in Southeast Asia but also in other parts of the world, including Europe and the Middle East. Obviously, both product and geographic diversification are becoming increasingly important.
Speaking about product solutions, there is also interest in investing in artificial intelligence. This is confirmed by projects which received significant funding, including MONIX (Thailand, digital lending, US$20 million), Qritive (Singapore, healthcare, US$7.5 million), Trust IQ (Singapore, software development, US$105 million), Advance Intelligence Group (Singapore, financial services, US$80 million), Soft Space (Malaysia, software, US$31.5 million) and others.
In particular, Advance Intelligence Group will direct the attracted investments to improve the work of AI, which is used in transactions, lending and other products. Trust IQ, together with its investors from the Masan Group, will develop a loyalty program that uses AI and ML, as well as a scoring system which does not require proving income when issuing credit cards.
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Another trend is non-standard projects, which also emphasize the change in the structure of investment in the region. For example, Little Wallet from Singapore claims to become the first in Southeast Asia to implement the concept of a “family bank”.
According to the company, no one in the region has tried to do this before. Little Wallet uses gamified youth branding to appeal to users aged 6 to 18. The company raised US$1.6 million in its pre-seed funding round. Pilon is another project from Singapore worth mentioning.
The company acts as a financial intermediary between banks, small and medium-sized businesses (suppliers) and large enterprises (purchasers) to ensure a seamless experience for all parties. Pilon raised US$5.2 million in seed funding.
A large group of investors took part in more than one deal — for example, Big Sky Capital, Gobi Partners, Northstar Group, EDBI, Openspace Ventures, East Ventures, MassMutual Ventures, Sequoia Capital, Khazanah.
There are investors who prefer investing in one direction (Big Sky Capital — lending; Khazanah — insurance; PayPal Ventures — payments and transactions), and those who are engaged in a variety of fintech products (Gobi Partners — insurance, neo banking; MassMutual Ventures — financial services, health; Northstar Group — lending, e-commerce). The comprehensive approach of large institutional investors confirms their interest in Southeast Asian fintech.
In conclusion, the current situation around the funding of fintech in Southeast Asia can indicate a change in the drivers of industry development.
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