Building on the technological strides and increased adoption seen in 2024, the fintech trends in Asia-Pacific (APAC) signal significant growth for the region’s financial sector in 2025. (fintechnews.sg)

This growth will be fueled by advancements in artificial intelligence (AI), the rise of tokenization, and increased adoption of digital banking, among other transformative trends, according to industry experts.

AI adoption will grow, especially in major markets like India and China, although the fragmented regulatory landscape will remain a key hurdle. At the same time, AI-driven fraud is set to escalade, requiring businesses to adopt equally advanced AI-driven defenses.

Tokenized assets will also gain in prominence, with more major banks anticipated to follow HSBC’s successful Gold Token initiative and address the rising demand for digital assets.

Finally, competition will increase in APAC’s banking landscape, with new digital players gaining ground. These new players are expected to challenge traditional banks, forcing incumbents to modernize their core systems and adopt AI technologies to stay relevant.

How AI is driving fintech trends in Asia-Pacific

In 2025, Forrester expects AI to continue to be of the key fintech trend in Asia Pacific, with leading firms prioritising AI-driven enhancements to maintain competitiveness.

Following a period of intense experimentation with generative AI (genAI) in 2024, businesses will face region-specific challenges such as stricter AI and data privacy regulations, limited maturity in data and analytics capabilities, and evolving customer demands.

To thrive in this landscape, companies will need to take a close look at their digital investments and focus on integrating AI into their operations in ways that deliver measurable value. Forrester expects companies with strong technical expertise, significant tech budgets, and access to regional tech providers, to lead the charge.

Forrester also identifies key trends shaping AI adoption in APAC over the coming years. In major markets like India and China, an estimated 60% of firms and governments are expected to integrate locally developed large language models (LLMs) alongside global models, targeting industries such as finance, education, and healthcare. Meanwhile, geopolitical tensions will drive an increase in regional AI investments. For example, locally produced AI chipsets are projected to power over 5% of AI computing in China, enhancing the country’s technological self-sufficiency.

Forrester notes however that APAC will continue to struggle with fragmented AI regulations. While many countries share core principles like citizen protection and data privacy, their implementations vary widely. For example, Singapore promotes responsible AI with mature guidelines, whereas China focuses on laws against algorithmic misconduct. India, on the other hand, uses existing criminal laws for similar issues.

Though Forrester notes that initiatives such as the ASEAN Guide on AI Governance and Ethics are emerging, they are still early-stage, requiring APAC organizations to invest in compliance tailored to each country’s regulations as AI adoption expands, the firm says.

The industrialization of fraud a fintech trend in Asia Pacific

Though AI promises immense potential, the technology also introduces significant risks. Philipp Pointner, Chief of Digital Identity, Jumio Corporation, expects fraud to evolve into an industrial-scale issue, with attackers leveraging advanced AI tools to create fake identities and deepfakes at an unprecedented scale.

“Gone are the days of lone-wolf attackers and small-scale operations — we are now facing coordinated, assembly-line-style fraud schemes that mimic the efficiency and organization of legitimate businesses,” Pointner said in a statement sent to the Fintech News Network.

“These AI-driven operations utilize generative models and automation to mass-produce fraudulent identities, conduct large-scale synthetic fraud attacks and bypass traditional identity verification measures with ease. This evolution represents a critical inflection point for industries such as finance, e-commerce and digital platforms that must safeguard vast amounts of sensitive user data​​.”

To counteract this, businesses will need move beyond traditional, reactive approaches and adopt equally advanced AI-driven defenses, such as multimodal liveness detection, real-time behavioral analytics and sophisticated biometric authentication, Pointner said. By deploying systems that analyze billions of data points across multiple sources, organizations will be able to identify complex fraudulent patterns and respond instantaneously.

Tokenized assets see increased adoption

Tokenized assets will gain momentum in APAC’s financial sector in 2025. Forrester expects the number of major banks issuing tokenized assets on blockchain to surge, driven by new digital asset regulations in jurisdictions including Hong Kong and Singapore.

In March, HSBC launched a digital “Gold Token” in Hong Kong that’s accessible to millions of customers with just a few clicks on their smartphones. The offering, which aims to cater to the region’s growing appetite for digital asset solutions, serves as a case study of successful tokenization.

Unlike firms that pursued blockchain for novelty, HSBC prioritized customer needs when developing the solution, integrating gold’s cultural and financial appeal with advanced distributed ledger technology (DLT) to democratize gold investment. This approach not only enhances accessibility and trust, but also enables the Gold Token initiative to achieve great success, positioning the bank as a leader in the emerging digital asset space.

Forrester expects more banks to prioritize tokenization in 2025, projecting increased investments in teams, processes, and technologies to capitalize on this trend.

A more competitive banking landscape

In 2025, APAC’s banking landscape will become increasingly 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 the Fintech and Digital Banking 2025 (Asia Pacific) IDC report commissioned by Backbase.

These neobanks and digital challengers are expected to pose significant threats to traditional banks, prompting incumbents to modernize their core systems and adopt AI-driven technologies.

By 2025, IDC expects that 44% of the top 250 banks across APAC will have responded to the threat and complete their “connected core” transformation, working on platform-based and componentized modernization, as well as API-enablement. 48% of banks in APAC are also set to leverage AI or machine learning (ML) technologies for data-driven decisions.

These trends are unfolding in a market where consumers are increasingly open to switching banking providers, signaling a shift in how and with whom people manage their finances.

RFI Global’s Trends and Predictions 2025 booklet reveals a rising trend of consumers changing banks in recent years. In Australia, for instance, 9% of consumers switched their main bank within the past 12 month, a record high. A similar trend is observed in Malaysia and Hong Kong.

In Singapore, the proportion of consumers that switched main banks over a five-year period increased from 12% in 2018 to 26% in 2024.

Digital-only banks, in particular, are gaining significant traction across APAC. In Singapore, usage surged from 4% in 2022 to 25% in 2024. Hong Kong saw growth from 22% in 2021 to 29% in 2023. While newer in Malaysia, 10% of consumers now use digital-only banks, reflecting steady adoption.

Investments and wealthtech gain momentum

In Southeast Asia, emerging affluent investors are showing increased optimism about investing, with many planning to increase their investment allocations in the coming year, according to RFI Global.

Confidence in domestic markets is particularly strong, especially in Hong Kong where investments in local shares have risen from 46% to 53% in 2024. Meanwhile, traditional savings preferences, such as savings accounts and term deposits, also remain popular in regions like Hong Kong and Singapore.

However, with economic uncertainty looming, this group may increasingly seek innovative savings products that offer both liquidity and higher returns, RFI Global predicts.

Moreover, as the financial influence of emerging affluents expands, they will push for more tailored financial solutions that cater to their needs for global market access, sustainability and prudent risk management. Financial providers that can anticipate these shifts and innovate in these areas will be well-placed to capture the attention of this dynamic and rapidly growing segment, the company says.

APAC is still an underpenetrated wealth management region but digital wealth as a market is rapidly growing. McKinsey projects that the region’s personal financial assets (PFA) wealth market will reach approximately US$84 trillion by 2028. Notably, an estimated US$700 billion in new PFA flows is expected to transition to digital wealth platforms over the next four years, a pace exceeding earlier predictions.

APAC leads the charge in cashless payments

Global cashless payment volumes are projected to increase by more than 80% from 2020 to 2025, from about 1 trillion transactions to almost 1.9 trillion, and to almost triple by 2030, according to analysis by PwC and Strategy&, PwC’s strategy consulting business.

Among all global regions, APAC is projected to grow the fastest, with cashless transaction volume increasing by 109% from 2020 to 2025 and then by 76% from 2025 to 2030. APAC will be followed by Africa (78%, 64%) and Europe (64%, 39%).

Several key factors will be driving this rapid expansion in cashless payments, including the surge in e-commerce, the rise of mobile-first economies, and the increasing adoption of mobile payments and QR code-based transactions.

These developments will be particularly evident in Southeast Asia, where the population is projected to reach 623 million by 2030. The region’s expanding consumer base, combined with a burgeoning middle class, will create an ideal environment for the adoption of digital payment solutions and innovations, PwC says.