Most people reading this probably have a few bank accounts and credit cards — yet over 80% of the world remains “underbanked” or “unbanked.”
Fintech continues to fill access gaps for the underbanked and convenience gaps for the average consumer. Still, the relatively new industry saw a stark valuation drop and loss of investment this past year. Experts at BDC described this as only a “necessary, short-term correction.”
Meaning?
Fintech is still on its way to becoming a $1.5 trillion industry by 2030, especially in the Asia-Pacific market, according to a new Global Fintech report from BCG.
Here are more highlights from the report.
Shift from real-time payments to B2B2X & B2B
Fintechs like Wise and Xero make it easy to pay partners, family members, and businesses overseas. Similarly, neobanks like Brazil’s Nubanks help create access to banking across underbanked populations. For the most part, fintech’s most recent emphasis has been on one-time payments and personal banking.
But BCG predicts a shift to the business and customer experience side of the equation:
- B2B: Business to business
- B2BX:
- B2B2C, helping businesses serve other customers
- B2B2B, helping businesses serve other businesses
The unique B2B2X market has a predicted 25% CAGR (C annual growth rate), fuelled by growth in financial infrastructure.
This new focus will support businesses struggling to access financing and credit.
Customer acquisition is both the top challenge and priority
Fintechs overpower traditional banking counterparts in automation, convenience, and access. That’s why banks see drastically lower customer satisfaction metrics compared to fintech.
Net promoter score is the likelihood of consumers recommending a product. For traditional financial services, NPS is a meager 23/100, while fintech NPS can reach as high as 90.
But customer acquisition still poses the biggest challenge to CEOs interviewed and biggest priority. New fintechs will have to couple customer acquisition challenges with scaling and growth to compete in the bustling market.
Banking licenses an obstacle to scaling for spread businesses (banks, neobanks, lenders)
Financing is a top concern for newer spread businesses, since it’s not as easy for them to access low-cost funds to operate.
BCG sees bank licenses as a vehicle for better funding access. This will prove vital to compete amidst traditional banks catching onto tech and open banking.
Asia-Pacific (APAC) to “outpace” US and Canada as the world’s largest fintech market
If you think young American professionals are tech-savvy, you might be forgetting about the increasing tech-focused population in the Asia-Pacific.
China, Indonesia, and India fuel the fintech market with the simultaneous largest fintechs and the largest population of underbanked people.
The result? APAC’s fintech market has a projected CAGR of 27% (compared to 17% for the US).Read BCG’s full report.
