FinTech in Singapore – a Passing Wave or Here to Stay?
Have you heard about Compressed Natural Gas (CNG)? If you have not, most probably you were not in Singapore during its prime years circa 2008. For the sake of those who do not know about CNG’s brief “stardom”, scroll all the way to the end of this article to find out more.
Why bring in CNG when the title of the article is about FinTech? Reason is very simple, this is to show you how Singapore (and largely how the rest of the world) works. Most emerging industries require strong support from the government for their success. For the case of CNG, it flourished under the strong support from government and many investors were highly hopeful of its success. Once the support was removed, the industry saw the light at the end of its tunnel dim off.
Let us now move to the topic of discussion – FinTech. End 2014 saw Singapore’s Prime Minister announcing his Smart Nation plans for Singapore and FinTech soon became part of the plan. As governmental support for FinTech grew, FinTech companies began to flourish, especially after the Monetary Authority of Singapore (MAS) introduced the regulatory sandbox for FinTech [LINK], a move which could be seen as MAS loosening its control on this emerging industry.
It is definitely the right time now to enter this booming industry as this wave is about to reach its peak. However, the question one should be asking is, “Is this the right industry to enter now?”. The current FinTech scene is seeing a tremendous influx of players; competition is heating up and reaching its boiling point. In order for this wave to be sustainable, it must have enough supply. Inevitably, this would result in FinTech companies “wandering” deep into the traditional banking space, into areas which are strongly guarded not only by banks, but also by regulators. If that happens, a fierce battle would eventually ensue.
The resulting battle might involve banks, which are heavily armed financially, going all out to take down these new entrants or even regulators taking a sweeping approach to clamp down and control FinTech companies. We have seen this in countries like Taiwan, where industry disruptors like Uber being forced to pause operations until they comply with the government’s regulatory requirements [LINK].
On top of the possible scenario of an eventual “war”, we would also need to assess if this is a passing wave or is here to stay. Early signals of a potential decline had emerged. In 2016, we saw a decline of almost 50% in the global investment in FinTech companies, according to the Pulse of FinTech Q4’16 report by KPMG [LINK]. In Singapore, while the government drives the country to become a prominent FinTech hub, there was a 65% drop in overall investment in Singapore-based FinTech companies (down from US$605 million to US$214 million, per the Pulse of FinTech) for the year 2016. Though we cannot conclude that the FinTech wave is on the decline and the above might just be a short-term phenomenon, this should not be ignored as the percentage drop is rather significant.
No doubt it is still too early to provide an answer for the sharp dip in global interests towards FinTech, we could however analyse the possible causes and effects of this dip in global interests. If you would like to have an intellectual, in-depth discussion on topics related to the Future of FinTech, join us this coming 07 July, at Asia FinTech Hub’s FinTech Professionals Congress where leading FinTech thought leaders share their invaluable insights on topics which would SHAPE OUR FUTURE!
For more information regarding the congress, please follow the link:
General Information: https://www.asiafintechhub.com/upcoming-events-1
Speakers’ Profiles: https://www.asiafintechhub.com/speakers-profile
Promotional Video: https://youtu.be/n759Ipmaji8
CNG’s Brief Stardom
In 2008, CNG shot to fame in Singapore when its government announced its strong support for CNG. With the strong government support and incentives provided starting 2008, CNG gained traction and during its peak, businessman Mr Teo Kiang Ang even envisioned the world's largest CNG refuelling station in Singapore - a 7,066m2 facility with 46 pumps [LINK]. CNG’s decline came when Singapore’s government announced that it would be removing the Special Tax Exemption from 2012 onwards and imposing additional duty. This resulted in the drastic decrease from around 5400 CNG vehicles in 2011 to around 2700 in 2016 [LINK]. With Singapore vehicles having a span of 10 years, this trend would most likely continue until no more such vehicles exist on the road.
