GLOBAL

FINTECH
REPORT
Published: May 2023
Authors: Boston Consulting Group & QED
Investors
https://web-assets.bcg.com/66/7e/a36d7eab41e2b4b65c3e
687a17f5/bcg-qed-global-fintech-report-2023-reimagining-t
he-future-of-finance-may-2023.pdf
 Fintech ~ Finance &
Technology
• For the past two decades, the fintech industry has been
shaped by the rise and rapid adoption of transformative
technologies and the applications (“apps”) they enable.
• Many fintech firms have contributed in three ways:
delivered high-quality, service-focused digital experiences
(Page 11 ~ Exhibit 5) (Net Promoter Score),
provided access to unbanked and underserved customer
segments (Financial Inclusion) ,
and introduced cost effective ways of operations
 Net Promoter Score
• Net Promoter Score (NPS) is the world’s leading metric for measuring
customer satisfaction and loyalty.
• It goes beyond measuring how satisfied a customer is with a company. The NPS
system is designed to gauge the customer’s willingness to recommend your brand
to others.
• The most common way to calculate the NPS is to ask customers to rate (on a
scale of 1-10) how likely it is that they would recommend your brand to a friend
or colleague. NPS is based on the principle that every organization's
customer can be divided into three categories:

• Promoters represent a score of 9-10 out of 10. These customers are loyal
enthusiasts who will keep buying, refer to others and fuel growth.
• Passives represent a score of 7-8 out of 10. These individuals are satisfied but
unenthusiastic customers who are vulnerable to your competitors' offerings.
• Detractors represent a score ranging from 0-6 out of 10. They are generally
unhappy customers who can damage your brand, impeding your growth through
negative word-of-mouth.
 Financial Inclusion
• Financial inclusion means that individuals and businesses have access to
useful and affordable financial products and services that meet their
needs – transactions, payments, savings, credit and insurance – delivered
in a responsible and sustainable way.
• Being able to have access to a transaction account is a first step toward
broader financial inclusion since a transaction account allows people to
store money, send and receive payments.
• A transaction account serves as a gateway to other financial services,
which is why ensuring that people worldwide can have access to a
transaction account continues to be an area of focus for the World Bank
Group (WBG).
• Digital financial services — including those involving the use of mobile
phones — have now been launched in more than 80 countries, with some
reaching significant scale.
 Fintech Report
• (Page 3) ~ key highlights
• The pandemic served as a catalyst for broad consumer
adoption of digital financial services
• Major global fintech players ~ like Stripe, Square
• PayPal in the US is a household name and one of the
few multinationals in fintech industry
 Fintech Report
• Over Three-Quarters of Adults Remain Unbanked or Underbanked
Globally (Page 13 ~ exhibit 6)
•https://web-assets.bcg.com/66/7e/a36d7eab41e2b4b65c3e687a17f5
/bcg-qed-global-fintech-report-2023-reimagining-the-future-of-fina
nce-may-2023.pdf
• Asia-Pacific Will Be the Largest Fintech Market by 2030
• Latin America and Africa Will Be the Fastest-Growing Regions
• Page 16-19 ~ exhibit 11
• Nubank in Brazil and PayTM in India have become household
names, Alipay in China is a huge fintech player
 FinTech
• Nubank in Brazil • Some 13 million consumers applied for a Nubank
credit card since its launch and the company has
• Nubank is a real neobank — meaning it’s managed to cater for 2.5 million people so far.
100% digital. This removes the need for a However, the bank account will be offered to
physical location, moving all account anyone since it will not require credit checks
transactions online beforehand.
 São Paulo-based fintech Nubank has announced its
• Half of adult population is their customer base
plans to cater for Brazil's unbanked population with
~ 80 million customers a digital bank account.
• "We launched our credit card product as a  The pros for the fintech include: Free to set up a
response to the fact that the interest rates in Nubank personal or business account, no account
Brazil are among the highest in the world and maintenance fees, no fees for instant money
the level of service [of traditional banks] is transfers and user-friendly app
also among the worst in the world,"  The cons for the fintech include: Payment per ATM
• This was essential as cash withdrawal, only available to residents of
Brazil has the largest mobile internet market a Brazil and limited product offering
nd smartphone penetration in Latin America.
 FinTech
• PayTM in India • PayTM in India

•Paytm has emerged as a pioneer in pushing financial

•What is Paytm? Paytm stands for Pay through mobile
inclusion through its user-friendly design, digital wallets,
and it is India's largest mobile payments and commerce QR code payments, and micro-loans.
platform. It lets you transfer money instantly to anyone
at zero cost using the Paytm Wallet. •Its focus on financial awareness and outreach to
marginalized communities has empowered both
•Recharge & pay bills, book flights & movie tickets, individuals and companies.
open a savings account, invest in stocks & mutual
funds, and do a lot more. •Paytm's digital wallet functions as a virtual account that
users may load with money and use for a variety of
•Load up your Paytm Wallet for free and make transactions.
payments in a jiffy at over 21 million stores, websites
and apps. •Paytm uses mobile technology to allow users to make
payments, move money, and access a variety of financial
•Get a Personal Loan in 2 Minutes services without the requirement for a traditional bank
•Paytm offers India's quickest multi-purpose, hassle- account. For millions of Indians who were previously
free loan. It is 100% digital, transparent and paperless. barred from formal banking institutions, this has proven to
be a game changer.
 Fintech
• Alipay in China
• AliPay was launched in 2004 as a digital wallet service, and it quickly grew in China.
The app is insanely popular with over 1 billion active users and over 200 million daily
transactions
• The platform has also expanded globally, providing services across more than 50
countries including Southeast Asia, Africa, and Europe
• One of the key features that sets AliPay apart from other mobile payment systems is its
integration with other services offered by Alibaba Group, such as e-commerce
platforms and financial services. This allows users to make payments and manage their
finances in one convenient location
• Micro-loans: AliPay also offers micro-loans to its users, allowing them to borrow small
amounts of money quickly and easily
• Credit scoring: AliPay has a credit scoring system that evaluates the creditworthiness of
its users, this allows them to access financial products and services like micro-loans and
credit lines through the app
• Why customers choose Alipay? Convenience, Security, Attracting Chinese Tourists
• There are several reasons why merchants may want to accept AliPay for their business
~ Popularity & Attracting Chinese Tourists
• Alipay offers an international payment service that accepts 18 different currencies
• Alipay has a feature for non-Chinese users called Tour Pass
 Global Fintech Growth
• The drivers shaping the fintech space have • Separating emerging APAC (e.g., China, India, and
performed differently across regions over the past Indonesia) from developed APAC (e.g., Japan and
20 years—leading to diverging levels of maturity— South Korea), most growth is expected to come
determined mainly by: from the former, as it has the largest fintechs,
• differences in available funding pools, sources of voluminous underbanked populations, a high
number of SMEs, and a rising tech-savvy youth and
talent, local regulatory postures, and technology
middle class.
adoption.
• India ~ India is undergoing major fintech activity
• Asia Pacific ~ is poised to outpace the US and
with the emergence of local champions such as
become the world’s top fintech market by 2030, a
PayTM and Razorpay.
projected CAGR of 27%
• China ~ Before COVID-19, two of the top-10 tech
• This growth will be driven primarily by local
companies in the world by market value, Tencent
champions in emerging APAC that will solve access
and Alibaba, were based on the east coast of China.
issues, thus facilitating financial inclusion
 Global Fintech Growth
• Europe • North America
The UK and European Union combined represent North America currently has the world’s largest
the world’s third-largest FI market and are expected financial services industry, with an annual revenue
to witness major fintech growth through 2030 pool of nearly $5 trillion, and possesses the most
This FI market is dominated by incumbent banks mature innovation ecosystem in terms of venture
and contains relatively low fintech penetration (1% capital firms, entrepreneurs, talent pools,
of financial services revenues) universities, and access to funding
Regulators are relatively forward-looking, for Open banking has yet to play out, and there are
example, with open banking significant inefficiencies and customer-experience
Open banking is expected to foster the creation of pain points in the financial services industry that
new products and services will spur ongoing innovation.
 Global Fintech Growth
• Latin America • Africa and Middle East
Latin American markets, led by Brazil and Mexico, In Africa, although cash is still king, fintech could be
which have established fintech landscapes, are a vehicle to solve the access issue.
projected to show a revenue CAGR of 29% over the
same time frame. As the youngest and fastest- growing region globally
—with a median age of roughly 19 and projected
Brazil’s fintech space is growing rapidly with the population growth of an additional 1.2 billion people
emergence of players such as Nubank. by 2050
Nubank (Page 27) Nigeria, 73% of adults have a smartphone, but a mere
Founded in 2013 in Brazil, Nubank started as a no-fee 2% have credit cards
credit card provider and is now the largest neobank in Historically, telco-fintech players, such as M-Pesa,
the world. developed by Vodafone’s subsidiary Safaricom, have
led much of the segment’s growth in the region.
 Global Fintech Report
• The first part of the fintech journey was • Cross Border Payments
led by payments, representing 40% of all • Each year, over $20 trillion is moved across
fintech revenue in 2021 countries by large corporations, incurring
• Since 2000, payments fintechs have $120 billion in transaction costs, according to
a report by JP Morgan.
accounted for roughly 25% of
cumulative equity funding ($120 billion) • The market is as large as it is complex. For
instance, international remittances involve
• Overall, payments will remain the large-scale physical cash management,
largest fintech segment in 2030 multiple currencies, and several FIs
• (Page 21 ~ Exhibit 12) • Cross-border remittance businesses such as
Remitly, Wise, and Xoom have increased
• (Page 20-25)
access to international money transfers.
 FinTech
• Wise Razorpay serves more than 8 million
Wise was founded in 2010 in the UK with the goal merchants and processes $80 billion in total
of making international money transfers more payment volume per year.
affordable and accessible.
It has accomplished this by building a
Roughly 90% of transfers are handled within 24
hours, with 50% of them instant—compared with
platform designed to easily integrate with e-
two to five business days through traditional commerce platforms, accounting software,
channels. The average fee is 0.64% compared and point-of-sale systems. The company
with the standard 3%. has also introduced innovative features that
• RazorPay adapt to the needs of the Indian market—
Founded in 2014 in India, Razorpay started as a including UPI payments and digital
payment-gateway aggregator aimed at helping wallets—allowing it to differentiate itself.
businesses accept online payments through (seven acquisitions to date)
multiple channels.
 Global Fintech Report
• Real-time Payments • Embedded Finance & Financial
Infrastructure
• Real-time payments (RTPs), through
Point-of-sale-embedded lending, embedded insurance,
which a wire transfer is credited to the
and similar offerings will also find wider adoption,
recipient’s account in a matter of seconds, leading to an increase in cross-sell rates
is another growth area. Uber, for instance, already provides a range of services
• Examples: FedNow (2020), Target Instant to drivers within its app, including a debit card,
Payment Settlement (TIPS), RTP by cashback rewards, and real-time earnings tracking
People’s Bank of China (2010), India’s Infrastructure “as-a-service” companies that work
across segments—especially in areas such as
UPI and Brazil’s Pix.
cybersecurity, customer acquisition, KYC, UX, data
• As consumers transact more online and and analytics, and risk management—will enable a
directly with each other, reliable RTPs will variety of use cases among both fintechs and
incumbents.
become ubiquitous
 Global Fintech Report
• India Stack (Page 34) https://indiastack.org/
• The identity layer, providing a unique digital identity to
every Indian citizen through the Aadhaar system and
enabling KYC for banking services and biometric and
e-sign capabilities via its Aadhar credentials.
• The payments layer, including UPI for real-time and
P2P/P2M payments, and the Aadhaar Enabled Payment
System for biometric-based payments.
• The fintech & data layer, which allows individuals to share their
data with others in a secure and controlled manner. The
account aggregator framework is set to democratize
financial services with a robust data-sharing mechanism
with consumer consent.
 Global Fintech Report
• Insuretech and Wealthtech Opportunities Are There are three main reasons for this ~ regulations are a
Mostly in B2B2X (Page 29-30) lot and vary even from state to state at times, revenue
and profit is limited and it is a capital-intensive area.
However, despite huge revenue pools and relatively
poor customer service, fintech penetration in the • Enabling Incumbents to Be Leaner, and Reducing
industry, or so-called “insuretech,” represents a Time to Market
miniscule portion, at 0.3%. Perhaps the most significant opportunities in the
• The largest window is in P&C insurance industry are in tech enablement of human
processes and judgment.
Of the three main sub-segments of insurance—life,
• In Wealthtech, Targeting B2B2X Provides Some
P&C, and health—the largest window for fintechs lies
Opportunity
within P&C, as these products are mostly bought by
individuals, have a shorter duration of purchase, and First phase of innovation was driven by robo-advisors.
have a higher frequency of policies (e.g., in home Second phase of innovation was built on value-added
rental and auto). services such as cryptocurrencies offered by
• Limited Opportunity as a Disrupter companies such as Robinhood.