According to the e-Conomy SEA 2021 report1, 97 per cent of internet users in Singapore are also digital service consumers. The high penetration rate (highest in Southeast Asia) is a key driver in the rapid growth of FinTech in the country.
In UOB's FinTech in ASEAN 2021 report, produced in collaboration with PwC Singapore and the Singapore FinTech Association, we analysed the impact of digital acceleration on FinTech firms, investors and consumers in ASEAN-6 (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam). Drawing on the results of the consumer survey2 we ran in conjunction with the report, we now take a closer look at the findings from Singapore.
Singapore’s high credit and debit card penetration rate means that local consumers still pay with credit and debit cards above all else. Photo: Shutterstock
Singapore has the highest debit and credit card penetration rate in ASEAN, with 90 per cent of respondents using a debit or credit card in the last three months3. This can be attributed to Singapore's highly banked population – over 98 per cent of adult Singapore residents4 have bank accounts according to Monetary Authority of Singapore (MAS) estimates.
There appears to be an inverse relationship between debit/credit card penetration and e-wallet adoption. For example, the Philippines, Indonesia, Vietnam – countries with credit/debit card penetration rates below 50 per cent – have e-wallet usage rates over 60 per cent. In contrast, only 47 per cent of Singaporeans have used e-wallets in the last three months, and only 11 per cent said it was the payment method they used most often5.
Which of the following payment methods have you used in the past three months (both in-store and online)?
|Debit / Credit cards||90%||40%||46%||42%|
|E-wallets (e.g. GrabPay)||47%||74%||63%||63%|
Table 1: Singapore’s high debit/credit card penetration rate staves off e-wallet use. Source: FinTech in ASEAN 2021 research
When asked to name the factors influencing their reasons for using digital payment methods, Singaporeans identified convenience (75 per cent), rewards schemes (55 per cent) and widespread acceptance across merchants (51 per cent)6. These findings suggest that credit or debit cards already fulfil what local consumers need from digital payment providers.
However, sentiments about convenience and merchant acceptance will likely change over time as digital wallets adapt to Singapore’s existing payment infrastructure. In February 2021, the Association of Banks in Singapore (ABS) announced that local e-wallets GrabPay, LiquidPay and Singtel Dash had enabled PayNow capabilities7. The feature, formerly exclusive to banks, allows users to top up their e-wallets directly from their bank accounts (as opposed to their debit and credit cards) and transfer funds between e-wallet accounts.
Explore the data | Payment preferences of ASEAN consumers
Robo-advisors and digital wealth platforms in Singapore grew in popularity in 20218, driven by the wave of digital transformation caused by the pandemic and an increasing number of older investors – a trend that’s consistent across Southeast Asia.
Have you invested using digital trading and wealth management platforms? Which are the types of platforms that you have invested your funds in?
|Type of digital investment platform||Singapore||ASEAN-6|
|Traditional online brokerage platforms||32%||31%|
|Online-only trading platforms||27%||22%|
|Financial institution-backed robo-advisors||19%||14%|
|Micro-savings cum investment platforms||6%||13%|
|Have not invested using digital assets and wealth management platforms||38%||41%|
Table 2: Singaporean retail investors use traditional online brokerage platforms, online-only trading platforms and robo-advisors more than the ASEAN-6 average9. Source: FinTech in ASEAN 2021 research
Compared with the rest of ASEAN, Singapore’s retail investors are particularly conscious about keeping investment costs down and convenience. Singaporeans identified lower fees (66 per cent vs. ASEAN’s 56 per cent) and the convenience of transacting online (51 per cent vs. ASEAN’s 48 per cent) as the top factors pushing them to use digital platforms10.
Among those who have not invested using digital trading and wealth management platforms, 38 per cent were concerned about the risk of investing and 37 per cent said they simply didn’t know enough to try new, digitally-driven ways of building wealth. Meanwhile, 28 per cent said they did not invest at all11.
Explore the data | How ASEAN consumers are investing
Singapore’s pro-cryptocurrency stance aligns with the country’s ambition to be a global hub in the nascent crypto economy12. Out of the 35 new FinTech firms in Singapore in 2021, nine were cryptocurrency firms13. However, MAS recently tempered investor optimism by issuing guidelines, including banning crypto ATMs14 and public crypto advertising15, to dissuade public trading and protect people’s financial security.
This cautious approach mirrors the general attitude many Singaporeans have towards digital currencies. While 6 per cent of respondents already own digital currencies and 34 per cent would consider using them, more Singaporeans have misgivings over crypto than other consumers in Southeast Asia – 25 per cent said they would not use digital currencies as opposed to ASEAN’s 11 per cent16.
Of those that avoid digital currencies, 62 per cent said they simply did not trust them (vs. 48 per cent among the ASEAN-6)17.
Singapore's central business district at dusk. The country hopes to be a leading player in the global crypto economy; its central bank has recently put in place stronger regulations in this space. Photo: Peter Nguyen/Unsplash
BNPL schemes, led by services like Grab Holdings’ PayLater, Atome, and Hoolah among others, have generated plenty of consumer interest in Singapore18. As in other countries, however, the rise of BNPL schemes has not been without controversy. A 2020 Finder survey19 notes that a quarter of Singaporeans said they were financially worse off after a BNPL purchase, and 9 per cent were forced to pay penalties for missed payments.
MAS notes20 that while protections are in place to keep consumers from accumulating excessive debt, the agency is nevertheless assessing the need for a regulatory framework as BNPL schemes become more widely used.
Similar to the usage of credit/debit cards, there appears to be an inverse relationship between the popularity of BNPL services and credit card access across ASEAN countries. Among consumers who are willing to try “pay later” plans for purchases, 40 per cent would rather use credit card instalments. An even greater percentage (46 per cent) would prefer to avoid incurring debt while shopping – the highest in the region21.
Some retailers offer the option of pay later plans for purchases (electronics, fashion items, etc). Which pay later methods have you used or intend to use?
|Pay later method||Singapore||ASEAN-6|
|Credit card instalment plans||40%||47%|
|Buy now, pay later schemes (i.e. Atome)||25%||31%|
|I prefer to pay upfront||46%||35%|
Table 3: While many credit options are available to Singaporeans, almost one in two prefer not to incur more debt than necessary. Source: FinTech in ASEAN 2021 research
For some Singaporeans, buying insurance is still about getting advice from a professional. Photo: Mimi Thian/Unsplash
According to MoneySmart, 73 per cent of Singaporean consumers get information about insurance from online financial aggregators22, which provide price and feature comparisons of insurance products. This preference for online channels also extends to purchasing insurance.
Factors such as convenience (76 per cent), faster approval times (50 per cent), and access to better deals (48 per cent) were identified as the top three reasons consumers buy insurance online23.
More than one in two (55 per cent) of Singaporeans have purchased online insurance before24 – the highest in ASEAN. Travel insurance is by far the most popular type of insurance policy, purchased by 61 per cent of online buyers25.
What types of insurance have you purchased online?
|Other type of insurance||6%||3%|
Table 4: Travel insurance is the most popular type of insurance product purchased online in Singapore. Source: FinTech in ASEAN 2021 research
However, the need for a certain degree of human contact endures. Among Singaporeans who have yet to purchase insurance online, 80 per cent said26 they “prefer speaking to a professional to make an informed choice”. Among Singaporeans who have purchased insurance online, only 28 per cent have purchased life and health insurance online – significantly lower than the ASEAN average.
Singapore’s high banking penetration rate and availability of digital products offered by incumbent banks could present a challenge for digital-only banks looking to make inroads in the local market. The country’s virtual banks are also still in their early stages; the four successful digital bank applicants awarded Digital Full Bank and Digital Wholesale Bank licences by MAS in December 2020 are only due to begin operations in 2022.
These factors have contributed to hesitancy in digital-only banking. Only 45 per cent of Singaporeans said they would consider banking with a digital-only bank27 (the lowest in the region). However, there is room to change minds, as 37 per cent remained unsure and open to see what digital-only banks offer compared with ASEAN-6’s 33 per cent.
Of those who did not consider banking with a digital bank, 59 per cent said they simply found it hard to trust digital-only banks, 57 per were concerned about IT security and data protection, and 47 per cent had misgivings over the lack of physical ATMs and bank branches28.
Why would you not be interested to open a digital-only bank account with a new digital bank?
|It is hard to trust a bank that is only digital||59%||52%|
|Concerns over IT security and data||57%||58%|
|Lack of physical ATMs / bank branches||47%||38%|
|It is hard to trust a bank that is new and without a track record||44%||40%|
|Lack of access to in-person advisory services||44%||35%|
|Concerns over their financial strength and long-term prospects||39%||37%|
|I don't need another bank||20%||20%|
Table 5: Singaporeans are concerned about the trustworthiness and security of digital-only banks. Source: FinTech in ASEAN 2021 research
On the whole, these findings show that while Singaporeans are above-average adopters of digital wealth platforms, they are also Southeast Asia’s most cautious FinTech consumers. While younger consumers are keen on cryptocurrency investing29, recent MAS regulations, such as the ban of ads for crypto exchanges, may be affecting overall consumer trust in cryptocurrencies.
Much of this is due to how the key drivers of FinTech adoption in other ASEAN countries – such as an underbanked population, lack of access to credit, and low credit card penetration rate – do not apply to Singapore’s mature and well-served market. Perhaps another factor behind the slower growth of FinTech adoption in Singapore is the country’s high rate of financial literacy. With their longer exposure to an array of financial services from incumbent banks, Singaporeans may be more inclined to take fewer risks when assessing the value of FinTech products and comparing it to existing financial products in the market.
As MAS works towards Singapore’s vision of becoming a FinTech hub, the agency will likely open up the FinTech space for more new players to cope with consumer demand. However, disruptive financial instruments and products, such as digital currencies and alternative lending, will likely lead to new policies to protect consumers’ rights.
For more insights on Singapore and ASEAN’s dynamic FinTech industry, please download FinTech in ASEAN 2021: Digital takes flight.
1e-Conomy SEA 2021 report by Google, Temasek and Bain & Company.
2An electronic survey was conducted from 25 August to 7 September 2021 with a total of 3,086 respondents across Indonesia (519), Malaysia (513), the Philippines (512), Singapore (508), Thailand (515) and Vietnam (519) to find out more about their digital financial behaviours.
3FinTech in ASEAN 2021 research question A1: Thinking about your shopping habits, which of the following payment methods have you used in the past 3 months (both in-store and online)? Base: Total respondents.
4Reply to Parliamentary Question on Number of Adult Singaporeans Not Having a Bank Account and Reasons for Not Having One, Monetary Authority of Singapore, Parliamentary Replies, 4 September 2020.
5Question A1_2: And which of these have you used MOST OFTEN? Base: Total respondents.
6Question A2: What are the factors that influence your choice of paying via a digital payment method? Base: Total respondents.
7GrabPay, Liquid Pay, Singtel Dash roll out PayNow services, The Straits Times article, 8 February 2021.
8More retail investors turning to robo-advisers, a booming space eyed by fintechs and banks, CNA article, 19 August 2021.
9Question D1: Have you invested using digital trading and wealth management platforms? If yes, which are the type of platforms that you have invested your funds in? Base: Total respondents.
10Question D3: What are the top 3 factors that influence your choice of a digital trading and wealth management platform? Base: Those who have invested using digital trading and wealth management platforms.
11Question D1C. What are some of the reasons stopping you from investing using a digital and wealth management platform? Base: Those who have not invested using digital trading and wealth management platforms.
12Singapore wants to be leading player in global crypto economy: MAS chief Ravi Menon, The Straits Times article, 2 November 2021.
13FinTech in ASEAN 2021: Digital takes flight, UOB, November 2021.
14Why Singapore, the world’s ‘most crypto-friendly economy,’ is shutting down Bitcoin ATMs, Fortune article, 19 January 2022.
15Singapore cbank issues guidelines to discourage crypto trading by public, Reuters article, 17 January 2022.
16Question A7_1: A growing number of merchants worldwide are starting to accept digital currencies [like cryptocurrencies and central bank-issued digital currencies] as a mode of payment. Given a choice, would you use a digital currency? Base: Total respondents.
17Question A7_4: Why would you not want to use a digital currency? Base: Those who would not use digital currency.
18The buy now, pay later trend is growing in S’pore, but are you walking into a debt trap? Vulcan Post article, 23 July 2021.
19Buy Now Pay Later Report, Finder report, 10 June 2021.
20Reply to Parliamentary Question on Buy Now Pay Later schemes, Parliamentary Replies, 5 October 2021.
21Question B6: Some retailers offer the option of pay later plans for purchases (electronics, fashion items, etc). Which pay later methods have you used or intend to use? Base: Total respondents.
22Bots vs Bodies: Are Singaporeans Ready to Go Fully Digital for Insurance?, MoneySmart article, 22 September 2021.
23Question C2. What are some reasons why you opted to buy insurance online? Base: Those who have purchased insurance online before.
24Question C1. Have you purchased any insurance online before? Base: Total respondents.
25Question C1A. What types of insurance have you purchased online? Base: Those who have purchased insurance online before.
26Question C3. What are the reasons holding you back from purchasing an insurance online? Base: Those who have not purchased insurance online before.
27Question E2. With the increase in digital-only banks across Asia, would you consider banking with a digital bank? Base: Total respondents.
28Question E4A. Why would you not be interested to open a digital-only bank account with a new digital bank? Base: Those who didn't consider banking with a digital bank.
29In Singapore, 93% of people have heard of cryptocurrency, 66% of the young own some, and more plan on buying, thanks to the nation's pro-crypto stance, a survey finds, Markets Insider article, 26 July 2021.
More Indonesians are using e-wallets and BNPL products, according to UOB’s FinTech in ASEAN 2021 survey. New retail investors have also flocked to robo-advisors.
The rising number of ASEAN consumers going online is accelerating the adoption of digital financial services. As funding into ASEAN's FinTech industry reaches an all-time high, find out what opportunities lie ahead.