Fintech startups: Asia-Pacific to overtake US to become world’s largest fintech market by 2030: report

The Asia-Pacific region, led by India, China and Indonesia, is expected to overtake the US to become the world leader. fintech market by 2030, according to a report by a global consulting agency BCG and venture company KED investors.

Name Global Fintech 2023: Rethinking the Future of Financethe report predicts that the global fintech industry will grow six-fold by 2030, from $245 billion to $1.5 trillion.

In addition, the sector, which currently accounts for 2% of the $12.5 trillion global financial services pie, is estimated to grow to 7% by the end of this decade.

“Customer experience remains poor. More than half of the world’s population is still unbanked or unbanked, and technology continues to rapidly open up new use cases,” said Deepak Goyal, Managing Director and Senior Partner at BCG and co-author of the report. “Therefore, all parties concerned should seize the moment. Regulators must be proactive and lead. Actors should partner with fintech companies to accelerate their digital journey.”

The report notes that while the early stages of fintech’s evolution were dominated by payments, which have accounted for roughly 25% of total equity funding ($120 billion) since 2000, B2B2X and B2B (serving small businesses) will lead in the next phase. .

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The B2B2X market, which includes B2B2C (allowing other players to better serve consumers), B2B2B (allowing other players to better serve businesses) and financial infrastructure participants, is expected to grow at a CAGR of 25% and reach $440 billion in annual revenue by 2030

India, China and the history of fintech
According to the report, India is experiencing “major fintech activity” with the emergence of local champions such as Paytm and Razorpey.

“Fintech companies in the country have a clear opportunity to provide financial services to India’s 190 million unbanked adults, especially as smartphones are ubiquitous but bank accounts are not. The Indian regulator (read Reserve Bank of India) is playing an active role in shaping the market through tools such as United Payments Interface (UPI), Aadhar, Rupay and Digilocker.

He also expects fintech revenue growth in India to be driven by higher GDP (at a CAGR of 7% per annum), the rise of an educated middle class, a younger demographic coming of age, and increased penetration of fintech, with lending, non-banking business and welfare technology. to see significant activity.

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However, the majority of fintech revenue in the APAC region currently comes from China, and the report expects it to remain the regional leader in the coming years.

Regulatory oversight
Tighter regulations, inflationary pressures and local competition will be major challenges for the fintech industry, the report says.

In India, for example, the RBI cracked down on several fintech players in an attempt to further formalize the sector. He was also cautious about issuing banking licenses. Recently, neobank Jupiter received a license of a non-banking financial company (NBFC) from the RBIon rare occasion.

The report notes that a major merchant acquirer tried to enter the Indian market but ultimately withdrew due to regulatory issues and fierce local competition. “The same player then found success in Canada and the UK,” the post reads.

However, it envisions “a more active regulatory environment, paving the way for supporting investment in infrastructure (such as digital public goods) and opening up opportunities for innovation in parts of the world that are still striving to expand financial inclusion.”

Recent banking crises (such as SVB and Crédit Suisse) and major financial scams such as the FTX scam have made regulators more sensitive to asset/liability management.

The report emphasizes that regulators should take care not to over-regulate the industry and stifle innovation by creating barriers. “To spur future growth, regulators will need to proactively design and implement policies that protect consumers but do not stifle innovation,” it said.

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