Hong Kong Fintech Ecosystem Report

2 The Growing Importance of Fintech across the World The remarkable expansion of fintech in recent years has been facilitated by robust growth in the banking sector, accelerated digitization, evolving customer demands, and enhanced support from regulators and investors.¹ Notably, more than half of the profitable challenger banks are located in Asia.² As of the end of 2023, the market capitalization of publicly traded fintech companies³ reached US$573 billion.4 As fintech continues to grow and scale, the financial services ecosystem will uncover new opportunities.5 For instance, billions of individuals worldwide remain underbanked or unbanked. In response, fintech is increasingly providing tailored services to these segments, particularly the underbanked. Mobile connectivity in emerging markets and developing economies (EMDEs) has enabled these markets to overcome barriers posed by traditional banking infrastructure, significantly reducing service costs. Additionally, Generative Artificial Intelligence (Gen AI) presents substantial potential for fintech, with its market size projected to grow fivefold, reaching approximately US$1.5 trillion in revenue by 2030, up from US$320 billion in June 2024.6 Over the past decade, fintech funding has surged. According to estimates from the Bank of International Settlements in 2021, over US$1 trillion has been raised globally since 2010.7 Although there was a notable decline in fintech investment of US$89.6 billion from 2021 to 2023, investments across various regions from 2011 to 2021 remained quite robust.8 , 9 1. https://www.mckinsey.com/industries/financial-services/our-insights/fintechs-a-new-paradigm-of-growth#/ 2. https://web-assets.bcg.com/a9/4e/eeb7ae814bfb98d918fac0fcc4ce/2024-fintech-report-june-2024-edit-03.pdf 3. “Fintech companies” are defined as companies with financial technology products and services pertaining to the financial industry. 4. https://fintechindex.fprimecapital.com/wp-content/uploads/2024/03/2024-F-Prime-Capital-State-of-Fintech-Report.pdf 5. https://www.jbs.cam.ac.uk/wp-content/uploads/2024/01/2024-01-ccaf-future-of-global-fintech-report.pdf 6. https://web-assets.bcg.com/a9/4e/eeb7ae814bfb98d918fac0fcc4ce/2024-fintech-report-june-2024-edit-03.pdf 7. Bank for International Settlements (BIS), Funding for fintechs: patterns and drivers, BIS Quarterly Review, 2021. 8. https://www.cbinsights.com/reports/CB-Insights_Fintech-Report-Q3-2023.pdf 9. https://www.innovatefinance.com/capital/fintech-investment-landscape-2023/