Financial services a focus area for over three quarters of private investment companies investing in Japan, South Korea, China and Hong Kong, finds S-RM

New data from the 2023 Asia Investment Survey from leading global intelligence consultancy S-RM, has found that in more advanced economies such as China, Japan, and Korea, there was consistent interest in the ongoing development of financial services and fintech products.

For companies worldwide increasing investment in Japan and South Korea, financial services were the most common area for upcoming investment, listed by 78% of global decision-makers. Likewise, the report also found that 76% of companies investing in China and Hong Kong said that financial services were an area they were pursuing, again the highest result for any sector.

Over the past few years, throughout Asia, there is increasing interest in raising foreign investment in other aspects of the financial system, for example, bad-debt infrastructure. As a result, private investors revealed in the report that across the five Asian sub-regions, financial services and fintech opportunities came top, across a list of 16 other major sectors such as real estate, consumer goods, services, and renewable energy.

One of the reasons Asia is seen as such a promising potential opportunity for financial services and fintech investment, could be due to the large number of unbanked and underserved consumers. In Southeast Asia alone, it is estimated that 70% of the population do not yet have access to banking services, representing a large potential future market for investors to tap into.

Investor barriers

When asked about what the current deterrents and challenges there are with regards to investment, 73% of private investors, surveyed agreed that corporate governance standards in Asia are a barrier to investment in the region.

 However, despite these barriers, the top priority given to financial services shows that Asia will remain a focus of growth expectations and optimism. As of 2023, the World Bank predicts a 5.1% growth rate, which is well above the global average. Meanwhile, 91% of private investor respondents indicated that they now plan to invest more in the APAC region over the next five years than they had done before.

Morgan Stark, Head of Corporate Intelligence, Asia, at S-RM, comments:

“The positive attitudes towards investment in the APAC region, in particular the financial service sector and fintech, are extremely encouraging. These figures have clearly squashed any fears of APAC's growth slowing down post-COVID-19 and rising geopolitical tensions.

“As Asia continues to struggle with the burgeoning banking gap across its population, these statistics should make government leaders aware that this issue needs to be addressed. As investors decide where to place their attention, the next few years will be crucial for Asia's fintech and financial services.”

Kath Lau, Associate Director at S-RM, added:

“This is certainly an exciting time for financial services and the fintech industry as we can see these statistics have shown the overall attitude for investment here is hugely optimistic. Aside from addressing Asia's banking gap, innovation will be crucial to standing out to investors.

“There are many great outcomes we can expect from this growing industry in the coming years and we look forward to seeing what the real impact of this increase in investment will have on the APAC region.”