Fintech will become a 1.5 trillion dollar industry by 2030

The fintech sector, which currently accounts for two percent of the $12.5 trillion in global financial services, is projected to grow to seven percent.

2022 proved to be a tough year for fintechs, which on average lost more than half of their market value, but according to the research, this plunge was just a short-term correction in an otherwise long-term positive trajectory.

Asia-Pacific is poised to surpass the US to become the world’s top fintech market by 2030, with a projected compound annual growth rate (CAGR) of 27%. This growth will primarily be driven by emerging economies such as China, India, and Indonesia that have the largest fintechs, voluminous underbanked populations, a high number of small and medium-sized businesses, and a growing tech-savvy youth and middle class.

North America, which currently has the world’s largest financial services industry, will remain a critical fintech market and innovation hub, projected to grow fourfold to $520 billion by 2030, with the US accounting for an estimated 32% of global fintech revenue growth.

The UK and EU together represent the world’s third largest financial institution market and are expected to witness major fintech growth through 2030, estimated to more than quintuple by 2021 and led by the payments sector. Similarly, Latin American markets, led by Brazil and Mexico, which have established fintech landscapes, are estimated to show a revenue CAGR of 29% over the same timeframe. The report estimates a fintech revenue CAGR of 32% until 2030 in Africa.

The payments sector will grow fivefold to $520 billion, driven by cross-border payments, “payment plus” models (bill payment and payment apps that offer adjacent services such as wallet services), and the proliferation of use cases driven by real-time payments.

But it will be B2B2X and B2b (serving small businesses) that will lead the next fintech era, the report said. B2B2X consists of B2B2C, B2B2B and financial infrastructure actors. The B2B2X market is expected to grow at 25% CAGR to reach $440 billion in annual revenue by 2030, supported by growth in embedded finance and financial infrastructure. The B2b fintech market is expected to grow at a 32% CAGR to reach $285 billion in annual revenue by providing solutions to credit-starved and underserved small businesses.

The report says regulations must be proactive, leveling the playing field through such actions as enabling faster pathways for banking and payment institution licenses, supporting digital public infrastructure and facilitating an open banking ecosystem.

Deepak Goyal, BCG MD and senior partner and co-author of the report says, “The fintech journey is still in its early stages and will continue to revolutionize the financial services industry as we know it.

“The customer experience remains poor. More than half of the world’s population remains unbanked or underbanked, and technology continues to unlock new use cases by leaps and bounds. All stakeholders must therefore seize the moment. Regulators must be proactive and lead from the front. should work with fintechs to to accelerate their own digital journeys.”