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Thursday, December 2, 2021

Vietnam takes third spot in FinTech funding among ASEAN

The Saigon Times

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HCMC – Vietnam-based financial technology (FinTech) firms saw a sharp rebound in funding this year, helping the country secure the third spot in FinTech funding in the Association of Southeast Asian Nations (ASEAN).

The “FinTech in ASEAN 2021” report by the United Overseas Bank, PwC Singapore and the Singapore FinTech Association (SFA) showed that from January to September 2021, FinTech companies in Vietnam secured almost one-tenth of the total 167 deals in the ASEAN, amounting to US$388 million in funding.

The rebound in funding was attributed to two mega-rounds, US$250 million into VNPay, a mobile payment solutions provider for banks and businesses, and US$100 million into the series D fundraising round of MoMo, Vietnam’s largest e-wallet.

According to Shadab Taiyabi, president at SFA, one key driver of this resurgence was the pandemic, which has catalyzed digital adoption, driving the rise in digital payments and accelerating the shift toward digital channels within the financial services sector.

The “FinTech in ASEAN 2021” report noted that FinTech funding in the ASEAN surged more than three times from January to September 2021 compared with the entire year of 2020 to a historic high of US$3.5 billion. The growth was driven by 167 deals, including 13 mega-rounds, which accounted for US$2 billion of the total funding.

FinTech firms in Singapore continued to attract the most substantial funding in the ASEAN, securing almost half of the total deals, amounting to US$1.6 billion in funding. This includes six mega-rounds worth US$972 million in total. Indonesia retained its second position this year, raking in US$904 million in funding (26%).

Most investors showed strong interest in late-stage FinTech firms, which secured 10 out of 13 mega-rounds this year. This trend signaled a shift in the strategy of investors across several ASEAN markets as they take a more cautious and risk-averse approach of backing mature firms that are seen as standing a higher chance of emerging stronger from the pandemic.

Given the growing adoption of digital payments, investors placed their confidence in and injected the most considerable amount of funds into late-stage FinTech firms from the payments sector.

Janet Young, head of Group Channels and Digitalisation, UOB, said, “The revival of investments in the ASEAN’s FinTech industry has seen funding (at) a breakthrough US$3.5 billion this year. Looking beyond this strong rebound, the opportunity to forge strong win-win partnerships between incumbent banks, FinTech firms and ecosystem platform players and expanding across the region will remain instrumental in propelling the sustainable growth of the ASEAN’s FinTech firms.”

Funds injected into investment tech and cryptocurrency firms in the ASEAN saw the most substantial growth this year, taking both categories to the second and third place, respectively, after payments. This is also the first time in six years that alternative lending has been edged out of the top three spots in terms of funding, given the increasing interest in digital investments and digital currencies among consumers.

Compared with 2020, funding for investment tech firms grew by six times to US$457 million this year, in line with increasing consumer interest in the use of digital trading and wealth management tools.

According to a survey conducted by UOB, PwC and SFA in September 2021, among over 3,080 respondents across Vietnam, Indonesia, Malaysia, the Philippines, Singapore and Thailand, six out of 10 consumers have used digital tools such as robo-advisers and online brokerage platforms for their investment needs.

Funding for cryptocurrency firms came in third at US$356 million as they attracted five times the funding received in 2020.

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