6 minute read 4 Apr 2022
Hong kong financial district twilight

What is next for Asia in FinTech adoption

By EY Global

Ernst & Young Global Ltd.

6 minute read 4 Apr 2022

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  • EY global FinTech adoption index 2019 (pdf)

Some of the world’s most advanced FinTech markets are in Asia. Fierce competition may keep it that way.

The latest EY Global FinTech Adoption Index, a survey of 27,000 digitally active consumers in 27 markets, showed that Asia retains its global leadership in FinTech adoption. Over the past two years, adoption of FinTech tools across the region has skyrocketed among consumers and small businesses, particularly in China, India and the financial hubs.

What’s next? Often, technological advantages fade as slower-moving markets see the benefit of doing things a new way and catch up. To an extent, that’s happening now with global FinTech, as all eyes turn toward China. However, we believe that in some of the Asia-Pacific markets, several factors will help keep the East on the cutting edge: a new openness to innovation by regulators; the advent of virtual banks; the growth of the API ecosystem; and, finally, the entrance of new competitors backed by Chinese financial and technology giants.

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  • Download: EY Global FinTech Adoption Index 2019

Asia moves ahead

The Asia-Pacific region is so vast and diverse it usually defies any generalizations. But not when it comes to FinTech adoption: all over Asia and the eastern Pacific Rim, FinTech services are catching on. From fast-growing young economies, such as China and India, to mature markets, such as Australia and Japan, advanced FinTech systems are rapidly becoming part of the fabric of everyday life. In every market where consumers have smart phones – and, in Asia, the majority do – people are gaining access to a growing range of virtual financial services, and at a faster rate than in most of the world’s other markets.

In just two years, consumer usage rates of FinTech-powered services have doubled, and in some cases tripled, across key Asia-Pacific markets. Hong Kong, Singapore, and South Korea have 67% FinTech adoption, while Australia now stands at 58%. For now, most markets still lag far behind China’s 87% penetration, except for India, which is now nearly tied with Asia’s leading digital power. A smaller five-market survey of 1,000 small and medium enterprises (SMEs) in Mainland China, the US, the UK, South Africa, and Mexico suggests that a similar dynamic holds true for businesses.

1. China keeps its lead

In Asia, China is still the market setting the pace for FinTech innovation. Unencumbered by legacy technology, and aided by their integration with China’s powerful and ubiquitous ecommerce and social media platforms, such as Alibaba and WeChat, FinTech services are now thoroughly integrated into the life of the Chinese consumer.

The survey found that 87% of Chinese respondents now use one or more FinTech services and a stunning 99.5% are aware of online apps that facilitate money transfer, mobile payments, and non-bank money transfers. The SMEs survey told a similar story: at work as at home, online apps are now handling a steadily growing volume of businesses payments, borrowing, and investments.

2. But the game is changing -- again

But don’t confuse ubiquity with maturity. Over the next few years, we expect to see many more changes in the Asian financial services landscape, driven by advances in technology, loosening regulations, and competition among these companies.

Based on current trends, we expect three themes to dominate Asia-Pacific headlines over the next two to three years:

Markets continue to deregulate. In Asia, financial regulators have tended to be the traffic cops of banking and other financial services, dedicated to keeping the stream of transactions moving safely. Now, in some markets, they are taking on a second role: helping build a market that is still safe, or even safer, but much more flexible and encouraging of innovation.

Virtual bank competition heats up. This year, Hong Kong bank regulators approved licenses for eight virtual banks. Most are slated to open for business in Hong Kong in the first quarter of next year. While startups with little experience and less capital led the virtual banking charge in the United Kingdom, Hong Kong’s new contenders will be new only to the city.

Primarily consisting of joint ventures backed by major Chinese financial services and/or tech firms, the virtual banks are likely to be formidable from the beginning. Rich, smart and experienced, they represent a very different challenge than startups usually do.

One measure of just how serious a threat they pose is the fact that Hong Kong’s brick and mortar banks are already cutting deposit minimums and sweetening account offers, even before any of the new banks have launched. Nor will the competition stay in Hong Kong: Singapore is also expected to license a range of virtual banking contenders soon.

Open banking takes off. The combination of a new regulatory infrastructure and a more advanced technical infrastructure is already changing financial services in some markets. Over the next two years, we expect that for more and more Asian consumers, “bank” will become less of a noun and more of a verb. Goodbye, lobby; good night, sleepy guards; farewell, portfolio of three or four products. Hello, personal finance app store, with hundreds or even thousands of virtual financial services tailored to your particular needs, for your family and your business, and available 24/7.

3. Competition everywhere

Most Asian markets continue to benefit from a powerful FinTech feedback loop, with increased adoption driving increased innovation – and vice-versa. Mainland China still leads in consumer and SME-focused financial services innovation, but in other Asian markets, Chinese investments, and the inspiration of their example to local entrepreneurs, are driving rapid market penetration and innovation. In India, in particular, competition between the Chinese giants and the US tech companies for slices of the colossal, fast-growing market should continue to drive rapid changes to the financial ecosystem.

At the same time, strategists at incumbent financial services in Asia’s mature economies, such as Australia, Singapore, and Japan, are bracing for the kind of sophisticated and well-capitalized competitors that Hong Kong banks see in their immediate future. The more far-sighted players have determined, correctly in our view, that their continued success will depend on how well they can disrupt their own businesses before these competitors arrive from the US, the UK, and most of all, China.

On top of that, they must be on guard against the occasional successful homegrown startup that lures away traditional customers with a value proposition more closely aligned to their needs. These changes won’t happen overnight, but the next two years will be a very important period of technical, marketing, and regulatory experimentation in Asia’s new financial ecosystem.


In the West, social media and ecommerce companies are still considering whether to expand into financial services. In China, that future is now: Tencent, Alibaba, and other major tech firms are already fixtures in the financial services landscape. Over the next two years, most observers expect they will extend their reach beyond the Mainland, both through participation in virtual banks and through new offerings that leverage increasingly connected API access. Expect fireworks.

About this article

By EY Global

Ernst & Young Global Ltd.