The global fintech industry will more than triple its annual revenue by the end of this decade, according to a report from UBS.
In “Understanding China’s digital currency and blockchain initiatives,” a report released by UBS Global Wealth Management’s chief investment office, analysts wrote that fintech will generate $500 billion in annual revenue by 2030, more than tripling the $150 billion in revenue reported in 2018.
The UBS analysts go on to say that the fintech industry will experience double-digit revenue growth over the next eight years.
Fintech is growing annual revenue about three times as fast as the greater financial industry, said the report.
Nevertheless, UBS expects fintech penetration to rise slowly, from low single digits to high single digits by 2030, a call that may be “very conservative” according to the analysts.
In “Seven themes for the post-pandemic economy,” a second late April report from the UBS Wealth management chief investment office, the firm’s equity analysts pick up on a number of fintech investment trends, including an accelerated shift from brick-and-mortar commerce to e-commerce, an accelerated increase in adoption of mobile and contactless payments and an altered IT infrastructure.
In IT infrastructure, for example, UBS analysts argue that the long-term trend will be towards serving a “virtual consumer” with a “distributed workforce,” driving the need for more companies to move their IT onto the cloud and outsource IT expertise, however, in the near term, there’s likely to be a reduction in IT spending and companies will pull back from ambitious projects as they readjust to a new economic reality created by the Covid-19 pandemic.
The UBS analysts also predicted a divergence in the “sharing economy” with coronavirus-prompted reductions in the use of shared workspaces, ridesharing services and short-term home rental. Hotels and ride-hailing services will recover faster than their sharing economy counterparts, according to the report, but with so many people working from home, the future shared workspace concept is “cloudy.”
On the other hand, crowdfunding may actually accelerate due to Covid-19 as a number of service-oriented businesses have used crowdfunding platforms to raise cash during the shutdown. UBS believes crowdfunding services are poised to compete in the small- and mid-sized IPO segment as well as the market for lower credit quality loans.
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