Factors that support Singapore’s Fintech growth:
- Embedded finance
- AI-powered customer experience
- Sustainability and ESG
- Open banking and data sharing
What is Fintech?
Short for Financial Technology, it is a combination of different technologies used to improve and automate financial services. This process includes everything from mobile banking apps to peer-to-peer lending platforms to more complex technologies like blockchain and AI.
Ready to delve into the factors driving Singapore’s Fintech growth? Let's explore.
1. Embedded Finance
What is embedded finance?
“Embedded finance refers to the seamless integration of financial services into non-financial products and services.”
In simple terms, it enables non-financial services businesses to offer their customers a wide range of financial services, such as payment options like Buy Now, Pay Later (BNPL) and insurance products, without the required underlying financial structure one would experience from financial service businesses.
We can see this from online shopping checkout platforms, with staggered or lending payment options from point-of-sale systems, or additional insurance purchases from airlines.
Embedded finance key factors:
- Increased collaboration: The rise in the fintech sector has increased the partnership between financial and non-financial businesses. These traditional financial institutions and non-financial business collaborations are becoming more common, fostering innovation, and expanding the reach of embedded finance solutions.
- Customer experience: With the increased collaboration between financial and non-financial businesses, embedded finance solutions are increasingly designed to provide more seamless and personalised financial experiences with end users in mind. These solutions give customers more options and flexibility, enhancing customer satisfaction and loyalty.
- Buy Now, Pay Later (BNPL): In simple terms, BNPL gives consumers the option to purchase goods or services and pay later by splitting the payment into several instalments, commonly known as staggered payment options. This method has gained popularity amongst the younger generation in Singapore. Embedded finance enables seamless integration of these services into e-commerce platforms and other retail channels.
- Open banking: The continued development of open banking frameworks in Singapore is expected to facilitate the integration of financial services into non-financial platforms, driving the growth of embedded finance.
2. AI-powered customer experience
As countries move further into technological advancement to better customer experience, businesses adapt quickly to this transformation to keep up with the ongoing trend.
Singapore is on the brink of a significant transformation as it embraces AI to enhance customer experience across various sectors. From personalized shopping experiences to the implementation of AI-powered chatbots, the future of Singapore is bright with these technological advancements.
- Personalised customer journey: The AI algorithm's ability to analyse the vast amount of customer data, including browsing behaviour, preferences, abandoned carts, and purchase history, will deliver a highly personalised experience. This will create a more specific personalised journey, such as recommending products based on the customer’s previous actions and filter preferences, unique service offers, and brand marketing campaigns.
- Enhanced customer journey mapping: AI will analyse customer data and identify pain points and opportunities for improvement across the entire customer journey. This will enable businesses to optimise their processes and deliver more seamless and satisfying experiences.
- AI chatbots: With the rise of fast-paced online shopping and services, customers expect fast responses from businesses they deal with. Businesses have leveraged the power of AI with virtual assistants to provide this highly demanded instant customer support for a wide range of services, from answering basic questions to resolving complex issues.
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3. Sustainability and ESG
Singapore is actively embracing the growth of financial sustainability and environmental, social, and governance (ESG) trends. It has surged in integrating ESG factors into its financial decision-making and positioning itself as a leader in Asia’s sustainable finance landscape. This move is inspiring as more Singaporean businesses are encouraged to adopt more responsible financial practices that align with global sustainability goals.
Here are some of the key factors:
- ESG investment: This growth can be seen in the significant increase in ESG-focused investments, with assets under management of sustainable investment products projected to reach US$33.9tn by 2026, as reported by PWC.
- - Mandatory climate reporting: Starting in 2025, Singapore will mandate climate reporting for all listed companies to improve transparency, accountability, and sustainability practices across the city-state. This will mark the first in Asia to practice this. You can learn more about this implementation here.
- - Green finance initiative: Green finance refers to the practice whereby financial instruments support environmentally friendly activities. An example of such initiatives the Singapore government takes is issuing green bonds to finance infrastructure projects like the Cross Island Line and Jurong Region Line.
4. Open banking and data sharing
What is Open banking?
The implementation of open banking is a game-changer in the financial services industry. Businesses are adopting a new, more efficient way to interact with financial institutions, thanks to this innovative system.
Learn more about open banking in Singapore here.
Open banking implementation in Singapore
The Monetary Authority of Singapore (MAS) has actively promoted Open Banking through initiatives like the Singapore Financial Data Exchange (SGFinDex). SGFinDex is a data-sharing platform that allows consumers to consolidate financial information from different banks and government agencies. Learn more about Open banking.
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So, what is beyond 2025 for fintech in Singapore?
One thing for certain is that we can expect further advancement in fintech, not just in Singapore but across Asia. Better products and services will result from more sophisticated collaboration between finance and non-finance businesses, bringing about a better customer experience.
Book a demo or contact us today and learn how we at The Access Group can help you elevate your business processes and needs to meet the rising demand for technological advancement.