The UK and European Union currently have the third-largest financial institution market combined. The BCG report claims the fintech sector is expected to grow fivefold between 2021 and 2030, with the payments sector leading lead the way.
In addition, the Asia-Pacific region will become the leading fintech market in the world by 2030 – overtaking the US – with a projected compound annual growth rate of 27%. The growth will be driven mainly by emerging economies such as China, India, and Indonesia, which have large fintech companies, many small and medium-sized businesses, and a growing tech-savvy youth and middle class.
North America is currently the world’s largest financial services industry. The report predicts it will remain a big fintech market and innovation hub, with the fintech sector expected to grow fourfold to $520 billion by 2030.
The fintech sector currently holds a 2% share of the $12.5tn in global financial services revenue. According to BCG and QED Investors, that number will reach 7% by the beginning of the next decade.
Laimonas Noreika, co-founder and CEO of HeavyFinance, commented on the findings.
“These projections show exponential growth in the coming years, and yet so many key sectors have yet to fully benefit from the power of fintech”, Noreika said. “As our industry moves forward, we need a much wider conversation about the importance of protecting the environment, offering companies the opportunity to access sustainable climate investments, and driving cleaner, greener businesses by reducing CO2 emissions.”
Emerging technologies and the fintech sector
At the moment, the fintech sector is undergoing significant changes, enabled mainly by disruptive technologies.
According to GlobalData’s “Bi-Monthly Disruptor Roundup: Fintech February and March 2023” report, artificial intelligence, blockchain disruption, as well as strategic acquisitions are driving digital transformation across financial services as a whole.
One recent example is the recent collaboration between Stripe and OpenAI, announced in March. Under the tie-up, Stripe will embed OpenAI’s new natural language technology GPT-4 into its digital payment processing and other offerings.
Steve Hadaway, chief revenue officer at Encompass Corporation, also commented on the BCG and QED Investors’ report.
“The FinTech sector has huge potential for rapid growth, which is being reflected in the banking sector in particular. Today, every bank I speak to is wrestling with the same problem: How to meet increasing Know Your Customer (KYC) demands, regulatory and operational, in a way that is effective, efficient and helps to transform the organisation in a way that has tangible long-term benefits. The answer is technology, which will be a key driver in the growth of the sector”, Hadaway said.
“An increasing number of banks are embarking on digital transformation journeys, highlighting the need for solutions that are key to improving efficiency and customer experience to boost business growth. By utilising dynamic KYC process automation, for example, organisations are realising that they can unlock the value of their KYC data to win more business and reduce time to revenue. This is just one area of the industry that is perfectly placed to boom, as the technology, regulations and business strategy continues to closely align.”