FinTech in ASEAN 2024: A Decade of Innovation

FinTech in ASEAN 2024: A Decade of Innovation

Foreword

ASEAN is experiencing a pivotal moment in its financial evolution, with the FinTech sector playing a crucial role in transforming economies and societies. Over the past decade, FinTech funding in ASEAN has grown significantly, increasing more than 10 times from $900 million in the first nine months of 2015 to nearly $6.4 billion in 2021. Despite global economic pressures, ASEAN's FinTech funding remained relatively stable in 2024, dropping by less than 1 percent year-on-year. This resilience contrasts sharply with declines in funding in North America and Europe, where FinTech funding fell by over 35 percent.

Executive Summary

• ASEAN-6 FinTech Funding Stability: Despite global economic pressures, FinTech funding in the ASEAN-6 economies dropped by less than 1 percent year-on-year in 2024.
• Sector Breakdown: Payments and alternative lending sectors made up more than half of ASEAN’s total funding at $6.5 billion and $4.1 billion, respectively, over the past decade.
• Emerging Technologies: Generative AI, blockchain, and quantum computing are expected to be catalysts for reshaping the financial ecosystem.
• Investment Trends: Over 60 percent of total FinTech funding in ASEAN in 2024 went to early-stage start-ups, indicating strong investor confidence in innovation.
• Country Dynamics:
  • Thailand: Took second place for total FinTech funding in ASEAN this year, with Ascend Money's $195 million mega deal.
  • Indonesia: Funding share declined due to fewer large-scale investments.
  • Singapore: Continued to lead, accounting for 53 percent of total FinTech funding.
  • Philippines: Gained traction with Uno Bank's $32 million deal, pulling ahead of Malaysia and Vietnam.

Resilience in the Face of Decline

• Global FinTech Landscape: Global FinTech funding declined by 28 percent year-on-year to $39.6 billion in the first three quarters of 2024.
• Regional Trends: ASEAN-6 countries experienced a year-on-year drop of less than 1 percent, showing resilience and stability.
• Geographical Variations: Only South America and Africa registered a 15 percent year-on-year growth in FinTech funding.

Pre-Series, Early Stage, Late Stage, and Venture Debt Funding

• Total Funding: ASEAN funding has surged over tenfold since 2015, with sustained investor interest in early-stage FinTechs.
• Investment Breakdown: Seed- and early-stage investments made up more than 60 percent of total FinTech funding, boosted by two mega deals from GuildFi ($140 million) and Longbridge ($100 million).
• Average Deal Size: Increased by 8 percent year-on-year to $14.2 million in 9M 2024.
• Future Outlook: The Federal Reserve’s interest rate cut in September 2024 may encourage a shift towards more favorable economic conditions for venture capital investments.

Funding Breakdown by Country and Category

• Country Leadership: Singapore and Thailand led FinTech investments in the region, accounting for three-quarters of the total funding in 9M 2024.
• Category Leadership: Payments and blockchain-led financial services continued to dominate funding numbers, while alternative lending firms saw a decline.

Conclusion

ASEAN’s FinTech sector has demonstrated remarkable resilience and adaptability, even amidst global economic uncertainties. Continued collaboration and commitment to innovation are expected to unlock new opportunities and build a more inclusive and dynamic future.