Revenues or financial technology companies are expected to grow sixfold to $1.5 trillion by 2030, a report by Boston Consulting Group (BCG) and QED Investors showed.
Currently, the $12.5-trillion financial services industry is concentrated in North America and the Asia-Pacific region. By 2030, the Asia-Pacific region is expected to outpace the US and become the world’s largest financial technology market. The region is expected to rise at a compound annual growth rate of 27%, aided by fast-growing fintechs, which will facilitate financial inclusion.
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“Attractive demographics, native technology and engineering capabilities and prudent regulations, combined with the sheer necessity to innovate for accelerating the upliftment of large mass of humanity, make APAC the centre of gravity for fintechs,” says Yashraj Erande, managing director and partner, BCG.
The report contends that more growth in expected to occur in developing countries in the Asia-Pacific region like China, India and Indonesia as they have the largest fintechs, voluminous under-banked populations, a huge number of SMEs and a rising tech-savvy youth and middle class.
“India is undergoing major fintech activity with the emergence of local champions such as Paytm and Razorpay. There is a clear opportunity in the country for fintechs to provide financial-services access to India’s 190 million un-banked adults,” the report said. “We expect major fintech revenue growth in India to be spurred by expanding GDP, the rise of the educated middle class, younger demographics coming of age and increasing fintech penetration.”
Lending, neobanking and wealth technology platforms will drive the growth of financial technology companies in India.
While Latin America will see an accelerated penetration in financial technology, North America will continue to be a key fintech and innovation hub, the report said.
The US will account for 32% of global fintech revenue growth through 2030, aided by a sharp increase in B2B2X (B2B to any end user) and B2b businesses and expansion by monoline fintechs into additional products and services.
The fintech market in Europe is also expected to grow sharply.
The report comes at a time when various start-ups have been struggling to garner funds from private equity investors.
In such a scenario, fintechs must consider strengthening their competitiveness, pursuing aggressive strategies like talent acquisition, gain market share by entering new geographies, and explore opportunities for mergers and acquisitions, the report said.
