Singapore’s fintech funding has experienced a significant downturn in the first half of 2023, with a drop of 41% compared to the previous year, according to a report by KPMG. However, in a bid to boost the financial sector, the Monetary Authority of Singapore (MAS) has announced its plan to inject SGD 150 million over the next three years through the Financial Sector Technology and Innovation Scheme (FSTI 3.0).
The recent decline in fintech funding comes as a blow to the industry, with investments in Singapore’s fintech market falling to USD 934 million across 84 deals in H1’23. This marks a significant decrease when compared to the USD 1.6 billion invested across 117 deals in H2’22. In light of this, MAS aims to fuel innovation and drive growth by providing financial support through the FSTI 3.0.
The injection of funds will be channeled through various programs under the FSTI 3.0 scheme. One such initiative is the Enhanced Centre of Excellence track, which has been expanded to include corporate venture capital (CVC) entities. This enables CVCs to provide extensive mentorship and assistance to startups, with funding support of up to 50% of qualifying expenses, capped at SGD 2 million per project.
In addition, the Innovation Acceleration program aims to align with emerging technologies like Web 3.0. Through this program, open calls for innovative tech solutions will be made, with grant funding provided to support trial and commercialization efforts.
Addressing growing global concerns, MAS has also introduced the ESG FinTech track, which focuses on projects centered around environmental, social, and governance (ESG) aspects within the financial sector. Under this track, funding support of up to 50% of qualifying expenses, capped at SGD 500,000 per project, will be provided.
Furthermore, the FSTI 3.0 scheme continues to promote the adoption of Artificial Intelligence and Data Analytics (AIDA) as well as Regulation Technology (RegTech). Notably, AIDA adoption will be extended to smaller financial firms, while RegTech solutions will be made accessible to digitally evolving companies.
Ravi Menon, the Managing Director of MAS, emphasizes the positive impact of previous FSTI versions. Throughout the COVID-19 pandemic, FSTI 1.0 and 2.0 played a crucial role in enhancing the digital capabilities of financial institutions.
The injection of SGD 150 million into Singapore’s fintech ecosystem through the FSTI 3.0 scheme demonstrates MAS’s commitment to driving innovation and growth in the financial sector. With a focus on cutting-edge technologies and fostering a thriving tech ecosystem, the initiative aims to position Singapore as a global leader in fintech innovation. By providing financial support and avenues for tech startups and companies to thrive, MAS hopes to overcome the current funding slump and propel the industry forward.
