Building on the technological advancements and increased adoption seen in 2024, fintech trends in Asia Pacific (APAC) suggest significant growth for the region’s financial sector in 2025.
Industry experts say this growth will be driven by advances in artificial intelligence (AI), the rise of tokenization, and increased adoption of digital banking, among other transformative trends.
AI adoption is likely to increase, particularly in key markets such as India and China, but the fragmented regulatory environment will continue to be a major hurdle. At the same time, AI-powered fraud is on the rise, requiring businesses to adopt similarly advanced AI-powered defenses.
Tokenized assets are also gaining traction, with more major banks expected to follow HSBC’s successful gold token initiative to meet the growing demand for digital assets.
Finally, the banking industry in Asia Pacific will become more competitive as new digital players emerge. These new players are expected to challenge traditional banks, forcing them to modernize their core systems and deploy AI technologies to remain relevant.
How AI is driving fintech trends in Asia Pacific
2025 Forester I’m looking forward to it AI continues to be a key fintech trend in Asia Pacific, with leading companies prioritizing AI-powered enhancements to stay competitive.
After a period of intensive experimentation with generative AI (genAI) in 2024, companies will continue to face unique challenges in the region, including stricter AI and data privacy regulations, limited maturity of data and analytics capabilities, and evolving customer demands. will be faced with.
To thrive in this landscape, companies must carefully consider their digital investments and focus on integrating AI into their operations in ways that deliver tangible value. Forrester expects companies with strong technical expertise, large technology budgets, and access to regional technology providers to lead the way.
Forrester also identifies key trends that will shape AI adoption in APAC in the coming years. In major markets such as India and China, an estimated 60% of businesses and governments will integrate locally developed large-scale language models (LLMs) with global models for industries such as finance, education, and healthcare. It has been. Meanwhile, geopolitical tensions will likely increase AI investment in the region. For example, locally produced AI chipsets are expected to power more than 5% of China’s AI computing, increasing the country’s technological self-sufficiency.
However, Forrester notes that APAC will continue to struggle with fragmented AI regulation. Although many countries share core principles such as civil protection and data privacy, their implementation varies widely. For example, Singapore promotes responsible AI with mature guidelines, while China focuses on laws against algorithmic fraud. India, on the other hand, applies existing criminal laws to similar issues.
However, Forrester notes that initiatives like the ASEAN Guide on AI Governance and Ethics: is appearingAccording to the company, these are still in the early stages, and organizations in APAC are required to invest in compliance in line with each country’s regulations as AI adoption expands.
The industrialization of fraud is a fintech trend in Asia Pacific
Although AI promises immense potential, this technology also comes with significant risks. Philip Pointner, head of digital identity at Jumio Corporation, said fraud is becoming an industrial-scale problem as attackers leverage advanced AI tools to create fake IDs and deepfakes on an unprecedented scale. We expect this to develop.
“Gone are the days of lone wolf attackers and small-scale operations. We are now faced with organized, line-of-the-line fraud schemes that mimic the efficiency and organization of legitimate businesses.” Poyntner said in a statement to FinTech News. network.
“These AI-driven operations leverage generative models and automation to generate large numbers of fraudulent identities, conduct large-scale synthetic fraud attacks, and easily bypass traditional identity verification measures. The evolution represents a significant inflection point for industries such as finance, e-commerce, and digital platforms that need to protect vast amounts of sensitive user data.”
To combat this, enterprises must move beyond traditional reactive approaches to adopt equally advanced AI-driven defenses, including multimodal survival detection, real-time behavioral analytics, and advanced biometrics. said Pointner. By deploying systems that analyze billions of data points across multiple sources, organizations can identify complex fraud patterns and take immediate action.
Adoption of tokenized assets increases
In 2025, tokenized assets will gain momentum in the APAC financial sector. Forrester I’m looking forward to it New digital asset regulations in jurisdictions such as Hong Kong and Singapore have led to a surge in the number of large banks issuing tokenized assets on blockchain.
In March, HSBC launched Hong Kong’s digital “gold token”. Millions of customers can access it with just a few clicks on their smartphones. The service aims to meet the region’s growing demand for digital asset solutions. serve As a case study of successful tokenization.
Unlike companies that pursued blockchain for the sake of novelty, HSBC prioritized customer needs when developing solutions, integrating the cultural and economic appeal of gold with advanced distributed ledger technology (DLT). democratized investing. This approach not only improves accessibility and trust, but also allows the Gold Token initiative to be a huge success and position the bank as a leader in the emerging digital asset space.
Forrester expects more banks to prioritize tokenization in 2025, predicting increased investment in teams, processes, and technology to take advantage of this trend.
A more competitive banking environment
In 2025, the APAC banking industry will become even more competitive. By then, there will be at least 100 new challengers across the region and at least two digital banks in every APAC market. According to Based on the “Fintech and Digital Banking 2025 (Asia Pacific)” IDC report commissioned by Backbase.
These neobanks and digital challengers is expected It poses a significant threat to traditional banks, prompting them to modernize their core systems and adopt AI-driven technologies.
By 2025, IDC predicts that 44% of APAC’s top 250 banks will have responded to this threat, completing a “connected core” transformation and engaging in platform-based, componentized modernization and API enablement. I am. 48% of banks in APAC plan to leverage AI or machine learning (ML) technology for data-driven decision-making.
These trends are playing out in a market where consumers are increasingly open to switching banking providers, marking a shift in how and with whom people manage their finances.
RFI Global’s 2025 Trends and Forecasts Booklet reveal In recent years, the trend of consumers switching banks has increased. In Australia, for example, 9% of consumers switched their primary bank within the past 12 months, the highest ever. Similar trends can be seen in Malaysia and Hong Kong.
In Singapore, the proportion of consumers who switched their main bank over a five-year period increased from 12% in 2018 to 26% in 2024.
Digital-only banks, in particular, are gaining significant traction across the Asia-Pacific region. In Singapore, utilization jumped from 4% in 2022 to 25% in 2024. In Hong Kong, it increased from 22% in 2021 to 29% in 2023. Although relatively new to Malaysia, 10% of consumers now use a digital-only bank, reflecting steady adoption. .
Investment and wealth tech gains momentum
Emerging high-net-worth investors in Southeast Asia are becoming more optimistic about investing, with many planning to increase their investment allocations next year, according to RFI Global.
Confidence in the domestic market is especially high, especially in Hong Kong, where investment in local stocks is expected to rise from 46% to 53% in 2024. Meanwhile, traditional savings options such as savings and term deposits remain popular in regions like Hong Kong. And Singapore.
However, with economic uncertainty looming, RFI Global predicts that this group may increasingly seek innovative savings products that offer both liquidity and higher returns.
Furthermore, as the economic influence of the newly wealthy group grows, they will drive more customized financial solutions that address their needs for global market access, sustainability, and prudent risk management. Financial providers that can anticipate these changes and innovate in these areas are well-positioned to capture the attention of this dynamic and fast-growing segment, the company said.
While Asia Pacific remains an under-penetrated region for asset management, digital assets as a market are rapidly growing. McKinsey project The region’s Personal Financial Assets (PFA) asset market is expected to reach approximately USD 84 trillion by 2028. Notably, an estimated US$700 billion of new PFA flows are expected to migrate to digital asset platforms over the next four years, faster than previously predicted. .
APAC takes the lead in cashless payments
The number of global cashless payments is expected to increase by more than 80% from 2020 to 2025, from approximately 1 trillion transactions to nearly 1.9 trillion, and nearly triple by 2030. Masu. According to Analysis by PwC and PwC’s strategic consulting business Strategy&.
Of all the world regions, APAC is projected to grow the fastest, with cashless transaction volumes increasing by 109% from 2020 to 2025 and 76% from 2025 to 2030. APAC will be followed by Africa (78%, 64%) and Europe. (64%, 39%).
Several key factors will drive the rapid expansion of cashless payments, including the proliferation of e-commerce, the rise of a mobile-first economy, and increased adoption of mobile payments and QR code-based transactions.
These developments will be particularly pronounced in Southeast Asia, where the population is expected to reach 623 million by 2030. The region’s expanding consumer base and growing middle class will create an ideal environment for the adoption of digital payment solutions and innovations. says PwC.
Featured image credit: Edited from freepic
