The fintech sector is expected to generate revenues of $1.5 trillion by 2030, with Asia-Pacific (APAC) “poised” to outpace the US and become the world’s top fintech market, according to Boston Consulting Group (BCG) and QED Investors.
The companies forecast the sixfold growth in revenues generated by the fintech sector as a whole, from $245 billion currently, in a new joint report, ‘Global Fintech 2023: Reimagining the Future of Finance’.
Fintech, which accounts for a 2% market share of the $12.5 trillion in global financial services revenue currently, is estimated to grow that share to 7% by the start of the next decade – of which, banking fintechs are expected to constitute nearly 25% of all banking valuations worldwide.
In their report, BCG and venture capital firm QED Investors project a compound annual growth rate (CAGR) of 27% in the Asia Pacific region over the period to 2030.
The growth will be driven primarily by emerging APAC, comprising China, India, and Indonesia, which has the largest fintechs, “voluminous underbanked populations”, a high number of SMEs, and “a rising tech-savvy youth and middle class”, according to BCG and QED Investors.
However, North America will remain a “critical fintech market and innovation hub”, the report revealed, given it is expected to grow fourfold to $520 billion in 2030, accounting for a predicted 32% of global fintech revenue growth – a CAGR of 17%.
“The fintech journey is still in its early stages and will continue to revolutionize the financial services industry as we know it,” said Deepak Goyal, BCG managing director and senior partner and co-author of the report.
“Customer experience remains poor. More than half the world’s population remains unbanked or underbanked, and technology continues to unlock new use cases in leaps and bounds.”
Goyal called on all stakeholders to “seize the moment”, adding that regulators need to be “proactive and lead from the front”.
“Incumbents should partner with fintechs to accelerate their own digital journeys,” he said.
The UK and European Union, combined, represent the world’s third-largest financial institution market, with fintech growth through to 2030 expected to be led by the payments sector.
Meanwhile, in Latin American markets, led by Brazil and Mexico, the report estimated revenue CAGR of 29% over the same time frame.
Nigel Morris, QED Investors managing partner and co-author of the report, added: “Fintech sits within financial services which is a massive, profitable industry, and the opportunity ahead of us to democratize access to these services on a global scale is tremendous.
“We expect to see continued growth not only in developed markets in the US and Europe, but also in developing fintech markets in LatAm, Asia, and Africa, where the inertia and friction is even greater.”