Move over US and Europe – there’s a new player in the fintech town. Asia’s fintech ecosystem is gaining rapid momentum with every coming day.
Not only does the region hold the largest concentration of fintech users, it has also established itself as the hub of digital payments. In a report, Statista showed that India and China constitute two-thirds of the global user base for proximity mobile payments.
As the fintech growth trends continue, Asia is on track to emerge as the leading market globally.
Supporting this claim, a BCG report says: “The fintech sector is estimated to reach $1.5 trillion in annual revenue by 2030, constituting almost 25 per cent of all banking valuations worldwide. With 42 per cent of all incremental revenues, the largest market is projected to be Asia-Pacific”.
The Asian fintech market is presenting a stand-out performance. A KPMG report depicted how, even though the global fintech investments fell by 30 per cent in 2022, funding in the APAC region increased from $50.2billion to $50.5billion.
From now till 2030, the APAC region is expected to move further up with an impressive CAGR of 27 per cent, brushing past the USA market. But what’s the force behind this growth? Experts predict that the region’s supportive regulations, evolving start-ups, and tech-savvy population are playing a collective role.
An upsurge in fintech needs high demand for digital transactions, a growing customer base, and a welcoming infrastructure. APAC has all three. With this, the region is getting a lot right that’s leading to the fintech boost. Here are the top 3 reasons:
Asia is incredibly quick to adopt new technologies for fintech growth and development. The rise of mobile payments in China clearly highlighted this trend. Here, the nation was quick to adopt a new technology – QR codes – to compensate for the lack of POS terminals. Soon, these turned into the norm..
As for a more recent trend, Asian fintech is rapidly adopting AI and ML tools to power up financial services. From personalizing banking experiences to enhancing risk assessment and fraud prevention, the nation is effectively utilising the new technologies to advance in the fintech space.
Asia’s banking system is much less fragmented in comparison to the USA or Europe. It helps create a supportive environment for inclusive growth and innovation.
Another important factor supporting the APAC region is the more flexible and lighter regulatory environment. In some countries, the fintech sector has received ample support from the government in terms of policies and digital-enabling initiatives.
For instance, the Vietnamese government pushed development in the fintech space with its announcement to make the economy cashless by 2020. In India, the introduction of the United Payments Interface (UPI) has given rise to many fintech startups in the digital payments space.
Asia is a sweet spot for a tech-savvy but financially underpenetrated market. There’s unfulfilled demand among the underbanked and unbanked population, creating sizable opportunities for fintech companies to scale.
In fact, the region is also targeting the rest of the population with non-bank lending facilities. They allow the population easier access to credit, coupled with greater speed, and convenience.
A common denominator amongst all Asian fintech startups is that they focus on the customer. They design products and offer services that serve their target audience’s needs and solve their problems.
You’ll find most American and European fintech startups focusing on profit generation. They’re hungry for something innovative, even when it’s not required. While innovation is important – sometimes, a simple, straightforward execution works best.
APAC fintech giants, like WeChat and Alipay, are live examples that you don’t always need to innovate. What’s required is a holistic, well-defined approach that meets the end-user's demands.
Lastly, a massive driving factor for most of APAC’s fintech growth is its supportive regulatory structure. If other nations follow suit, encouraging innovation and fintech developments, they could possibly accelerate growth in the sector.
As Asia’s fintech sector moves upwards on a route of rapid development, it provides other nations with a pool of valuable insights. It’s only a matter of time before they acknowledge and implement the learnings into their fintech ecosystem, inducing similar growth throughout it.
This paints a promising picture for the future of fintech – one that’s filled with exciting innovations, new developments, and collaborative global growth.