Fintech revenues are anticipated to expand considerably from $245 billion upwards to $1.5 trillion by 2030, according to a joint report by QED Investors and Boston Consulting Group.
The fintech industry, currently representing approximately 2% of the $12.5 trillion share in global financial services revenue, is predicted to increase to 7%. Last year proved to be a challenging time for fintech, which on average resulted in over 50% reduction in market value, but according to studies, the reduction was considered a short-term impact in what is considered to be a long-term positive trajectory.
Studies suggest that Asia-Pacific is expected to outpace the US and become the world’s biggest fintech market by 2030, with a predicted compound annual growth rate (CAGR) of 27%. This growth will be supported primarily by emerging economies in China, India and Indonesia that contain the largest fintech, significant underbanked populations, a large proportion of SMEs and an increasingly growing number of tech-savvy people, and middle-class populations.
North America, which contains the world’s largest financial services industry, will remain a vital fintech market and innovation hub, predicted to grow four times to $520 billion in 2030, with the US representing an estimated 32% of global fintech revenue growth.
The UK and the EU combined represent the third largest financial market worldwide, and expected to experience significant growth in fintech through 2030, estimated at over five times the value of 2021. Similarly, markets in Latin America, primarily driven by Brazil and Mexico, are predicted to generate a revenue CAGR of 29% within a similar timescale. The report also suggests a projected revenue CAGR of 32% until 2030 in Africa.
The findings indicate that the payments sector will expand fivefold to $520 billion, supported by cross-border payments, ‘payment-plus’ models and the rise of new cases driven by real-time payments. The report highlights that B2B2X and B2B (supporting smaller companies) will lead the next stage of fintech. B2B2X represent B2B2C, B2B2B and financial infrastructure players. The B2B2X market is predicted to grow at a 25% CAGR to $440 billion in annual revenues by 2030, supported by an increase in embedded finance and financial infrastructure. The B2B fintech market is anticipated to grow to 32% CAGR and reach $285 billion in annual revenue by offering solutions to small businesses lacking the necessary support and services.
The report states that regulators must remain proactive, balancing the playing field by implementing new measures such as enabling quicker payments for banking, supporting digital public infrastructure and allowing the development of an open banking system. Deepak Goyal, MD, senior partner and the co-author of the report, explains that the fintech journey is still in the early stages and will continue to transform the finance industry.
The customer experience remains a challenge, with over half of the global population remaining unbanked or underbanked and technology continuously enabling new opportunities daily. All stakeholders must utilise these new opportunities, and regulators must remain proactive and lead this technology transition in fintech. Traditional banks should embrace the digital revolution and collaborate with fintech to accelerate their digital path.
