Singapore recorded the worst ever recession in 2020—causing the economy to witness a 5.8 per cent decline coupled with over 20,000 local retrenchments. Despite the sluggish economic forecast, the startup sector in the city-state remained promising with S$5.5 billion received in funding, nearly three times the amount from five years ago.
Adding support to the startup ecosystem, the Singapore government pumped S$300 million into funding deep tech projects and another S$12 million to raise blockchain innovation.
With the booming startup sector still running at full steam, what will Singapore’s tech landscape look like for the rest of the year as the progression of vaccination edges the economy to recovery? How will emerging technology and blockchain startups grow to support, shape and influence the financial sector of the future?
Agility and resilience: Proponents of success?
With the benefit of size and structure, startups have remained resilient through the pandemic’s challenges and changes. With a flat organisational structure and fewer levels of middle management, communication is simplified and processes are more efficient.
As laws and restrictions evolve with the unpredictability of COVID-19, startups have the nimbleness to respond and restructure more promptly as compared to larger traditional counterparts.
When it comes to the financial sector, it has become apparent that a growing number of traditional players see themselves as lagging behind emerging fintech firms—many of whom are startups. With most startups having technology at their core, they can integrate new technologies and scale to meet the priorities of an increasingly digitised landscape.
Naturally, many startups have an added advantage to respond to the most pressing needs and demands of consumers today, giving rise to their prominence and success despite the economic downturn.
Also Read: 5 survival strategies for startups in a post-COVID-19 world
Post-COVID-19 finance
Across the globe, companies in fintech account for the highest proportion of today’s startups, surpassing the number of firms operating in life sciences and health, and artificial intelligence. In Singapore, fintech investments amassed to S$371 million in the second quarter of 2020 and many anticipate that fintech demand will sustain beyond the pandemic as digital finance gains traction in the new normal.
Another aspect of financial innovation that is gaining traction is the rising demand for cryptocurrencies from retail and institutional investors—resulting in the digital assets market doubling from pre-pandemic times.
As such, appetite for blockchain and crypto has attracted private investors flocking to the sector. Even the recent popularity of non-fungible tokens (NFTs) has further catapulted the digital asset industry to mainstream attention.
With the prominence and potential of the digital asset and fintech industry, it is more certain that the future of finance would be more digitised, accessible, and interconnected with our increasingly online lifestyles.
Even as the market gradually recovers with loosened restrictions, digital finance will likely continue to permeate the financial sector, supporting an increasingly vibrant tech landscape, and cementing the importance of fintech and digital assets post-COVID.
Out with the old?
As technology reshapes today’s economic landscape and establishes new and improved processes, traditional legacy businesses are quickly fading in today’s economy. While legacy establishments have made the bedrock of many industries we know, their practices which some may view as passé have been overshadowed by upstarts claiming the spotlight with technology-driven disruption.
From Grab’s recent record SPAC deal to Singlife’s merger with Aviva, it is clear that local startups are shifting the scales and rapidly rising amongst the ranks of their established predecessors.
However, legacy businesses still herald importance in providing legitimacy, trust and structure to industries and markets. With their established ways of working, reputation amongst consumers, and capital to generate research and development, there is still an important role for legacy establishments, as they continue to hold influence, provide jobs and anchor industries.
As such, even with the excitement and attention on startups, legacy businesses still hold a vital position in the future of tech and innovation, complementing new agile disruptors with their experience and knowledge in the field.
Many startups we celebrate today, from Revolut to Wise, were born from the 2008 Global Financial Crisis and as history has shown, today’s economic gloom is only fuel for tomorrow’s startup growth.
As we look to the future, startups will likely continue to affirm their position in emerging sectors, driving progression and potential of new technologies, priming the possibilities for greater growth and opportunities.
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