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APAC to Make up for Nearly Half of Global Fintech Revenue by 2030

Global fintech revenue is projected to grow sixfold between 2021 and 2030 to reach US$1.5 trillion annually. Asia-Pacific (APAC) will make up for the lion’s share of that sum, accounting for 40% of global fintech revenue or generating US$600 billion per year, a new report by Boston Consulting Group (BCG) and QED Investors says.

These numbers mean that APAC will outpace the US by then, the world’s current biggest fintech market, owing to stronger growth in fintech revenue which the study estimates will amount to 27% per year for APAC against 17% for the US.

Global Fintech Revenue Growth by Region, 2021 to 2030, Source: Global Fintech 2023: Reimagining the Future of Finance, Boston Consulting Group and QED Investors, May 2023

The report, titled Global Fintech 2023: Reimagining the Future of Finance and released in May 2023, looks at the state of the global fintech sector, exploring the latest trends, challenges and opportunities in the market.

It points to the strong growth the region is expected to witness, attributing the rise to APAC’s vibrant fintech sector and the region’s large population of unbanked.

The growth of fintech in APAC will be driven primarily by emerging markets, the report says. Countries like China, India and Indonesia currently have the largest fintech companies, voluminous underbanked populations, a high number of small and medium-sized enterprises (SMEs) as well as a rising tech-savvy young and middle class, it states, setting the foundations for future growth.

China will maintain its position as APAC’s fintech leader with established fintech giants such as Tencent and Alibaba continuing to dominate their respective markets and industries, it predicts. But at the same time, new local champions will also emerge, further stimulating the growth of fintech.

India, meanwhile, is seeing strong fintech activity with the advent of domestic leaders such as PayTM and Razorpay, though growth prospects still exist. India is home to 190 million unbanked adults and smartphones are becoming ubiquitous while bank accounts are still not.

At the same time, the Indian regulator is taking an active role in shaping the market through initiatives and infrastructural modernization efforts such as the United Payments Interface (UPI), the country’s instant payment system; Aadhaar, the national biometric identification system; Rupay, a global card payment network from India; and Digilocker, a cloud document storage wallet developed by the government.

China and India have two of the most dynamic fintech markets in the world. China is home to global fintech leaders such as the Ant Group, while India is a key player in the fintech landscape owing to its dynamic venture capital (VC) funding ecosystem, massive addressable market, and the government’s efforts to improve financial inclusion.

The global fintech sector

The fintech sector currently holds a mere 2% share of global financial services revenue. That rate is projected to rise to 9% by 2030, driven by growing penetration of both banking fintech products and insurtech solutions. These solutions are set to account for 13% of revenue pools for banking by 2030, up from 4% in 2021, and for 2% of insurance revenue pools in 2030, up from 0.3% in 2021.

Global Fintech Revenues (US$B), split by banking and insurance, Source: Global Fintech 2023: Reimagining the Future of Finance, Boston Consulting Group and QED Investors, May 2023

Though APAC will overtake the US in absolute fintech revenue by 2030, the North American country will remain a critical fintech market and innovation hub where fintech revenue is set to reach US$520 million per year. This amount suggests that US will account for 32% of global fintech revenue growth through 2030, recording a compound annual growth rate (CAGR) of 17% between 2021 and 2030.

According to the report, growth in the US’s fintech sector will be largely supported by the proliferation of business-to-business (B2B) products and B2B to any end-user (B2B2X) business models, the expansion by monoline fintech companies into additional products and services, and the country’s interchange pool.

Europe, meanwhile, will continue seeing more developments in its fintech sector, propelled by payment ecosystems, embedded finance, and B2B fintech, the report says. Additionally, open banking will foster the creation of new products and services, further contributing to the sector’s growth.

Annual fintech revenue in Europe is projected to increase by more than fivefold through 2030, growing at a CAGR of 21% to reach US$190 billion.

Finally, Africa and the Middle East, as well as Latin America (LatAm) are set to record the strongest growth, fueled by booming fintech adoption.

In Africa and the Middle East, the growth of fintech will be driven by demographic shifts and earning-power increases which will deepen the need for financial access, the report says. Africa and the Middle East is home to the youngest and fastest-growing population globally with projected population growth of an additional 1.2 billion people by 2050.

Annual fintech revenue in Africa and the Middle East is projected to grow at a significant CAGR of 32% between 2021 and 2030 to reach US$65 billion.

LatAm, meanwhile, are set to show a revenue CAGR of 29% over the time frame, subsequently reaching US$125 billion. This growth will be led by Brazil and Mexico, the two markets that have the most established fintech landscapes in the region, where innovation will accelerate as an inflow of native professionals trained and employed abroad return home to build up the local fintech ecosystem. The rise of fintech in LatAm will also be facilitated by supportive regulations and digitalization efforts from the region’s governments, the report says.

Featured image credit: Edited from Freepik