Singapore has developed into a prime location for wealthtech startups and venture capital inflows according to the WealthTech: Looking Ahead report, from digital wealthtech platform Endowus and KPMG.
The report provides an analysis of the expanding wealthtech landscape in Asia, the trends which are shaping wealth management, and notes that despite the economic challenges there are substantial opportunities ahead for the industry.
This optimism is based on the continued growth of individual and household wealth across different levels of wealth and untapped pension funds for investments.
Aligned with this is a generational wealth shift and a generational shift in consumer behaviour, where the Gen Z demographic are digitally native and demand larger control over their financial decisions.
Accelerated digitalisation
Underpinned by its political stability, tax incentives and a supportive regulatory environment, Singapore has positioned itself as a key wealth management hub both regionally and globally.
And as the wealth management sector expands and matures the city-state is also developing into a prime location for wealthtech startups and venture capital inflows.
Early-stage and late-stage average venture deal sizes in Singapore each surged to a record-high of over US$15 million in 2021, indicating improved investor confidence in the Singapore wealthtech venture ecosystem.
Singapore wealthtech venture funding hit more than US$161 million in 2021, slightly less than the record-high in 2020 which saw wealthtech venture funding hit US$164 million. But the 2021 level represented a seven-fold increase from just US$23 million in 2017.
Wealthtech venture deals in the Lion City have also begun to shift from angel and seed to early-stage deals, with angel and seed deals decreasing from a 60% share of all deals in 2017 to 39% in 2021. As the city state cements its position as a global wealth hub in the coming years, more firms are expected to move into late-stage venture funding and receive mega-round fundings (of over US$100 million).
New wealthtech players
High rates of internet penetration in Asia have also led to an increase in the adoption of digital financial services. This has made wealth management products accessible to the large and growing middle-class population at lower costs.
Global wealth is projected to rise by 39% over the next five years, reaching US$583 trillion by 2025, with Asia emerging as not only the fastest growing region but on track to eventually take over as the world’s biggest wealth market.
To adequately capture these growth and revenue opportunities, wealthtech will have a pivotal role to play, in allowing firms to serve new and current client segments – whether it is mass retail or high-net-worth individuals (HNWIs) – in a scalable and profitable manner.
The wealthtech opportunity will cover a wide spectrum, ranging from the automation of traditional wealth management through to the democratisation of wealth services for the average consumer or new forms of private banking.
