2025 Outlook: The Year for Action in Asia’s Digital Revolution______

Justin Christopher, Managing Director - Head of Asia

2025 marks a pivotal moment for Asia’s financial industry as the region transitions from strategy to execution in its digital transformation journey. The convergence of regulatory advancements, technological innovation, and increasing demand for global connectivity is setting the stage for exceptional growth and change.

The year ahead is poised to bring exciting developments across several key areas: the rapid expansion of ETFs as Asia cements its position as a global leader; the growing focus on settlement efficiency, particularly with the shift to T+1 cycles; and the tangible impact of tokenisation as it moves from theory to practice. At the heart of this evolution are financial hubs like Singapore and Hong Kong, driving innovation and collaboration to create a more resilient, efficient, and inclusive financial ecosystem.

Building on the foundations laid in recent years, 2025 promises to deliver tangible outcomes from the experimentation and groundwork that has defined Asia’s digital journey so far. The year ahead is not just about ideas but about execution, with firms turning digital aspirations into actionable strategies that unlock growth and opportunity.

Asia’s Digital Evolution Evolves From Vision to Execution

Digital innovation in Asia is moving beyond proofs of concept to real-world applications that deliver measurable benefits. Tokenisation, particularly in money markets and collateralisation, is emerging as a transformative tool, enabling greater liquidity, 24/7 trading capabilities, and operational efficiencies through immutable transaction records.

This progression reflects a growing maturity in the region’s approach to digitalisation. After years of exploration, firms are now looking to implement strategies that promise substantial returns. For example, initiatives to tokenise assets at a granular level—beyond the fund layer—are unlocking new opportunities for operational efficiency, liquidity, and investor personalisation. These developments mark a significant step towards fully digitalised fund management, where technology enhances every layer of the investment process.

ETFs: Asia’s Growth Engine

Asia’s ETF market continues to outpace global growth, with a remarkable 10-year CAGR of 23.6%, compared to the worldwide average of 17.5%. This rapid expansion positions the region as the fastest-growing ETF market globally, and we expect this momentum to accelerate further in 2025. With ETF assets under management increasing and the number of products surging, market participants must address operational inefficiencies and technological gaps.

Fragmented environments and reliance on manual workflows present significant challenges. However, solutions that promote automation, standardisation, and connectivity are key to unlocking further growth. Calastone is well-positioned to support this evolution, providing cutting-edge primary market technology that streamlines processes for issuers, authorised participants, and asset servicers. By addressing inefficiencies, we enable the ETF ecosystem in Asia to achieve its full potential.

Regulation: Enabling Growth While Navigating Complexity

Regulation remains a cornerstone of Asia’s financial transformation, shaping the conditions for growth while presenting challenges to navigate. Policymakers in Singapore and Hong Kong continue to lead the charge with frameworks that balance innovation with compliance. Singapore’s Project Guardian and the Global Layer One (GL1) initiative, for instance, aim to create a seamless infrastructure for tokenised asset flows, aligning with global standards and enhancing interoperability.

In Hong Kong, regulatory advancements such as Wealth Management Connect (WMC) 2.0 are expanding cross-border investment opportunities, with higher investor quotas and broader product offerings. However, both jurisdictions face shared challenges in addressing fragmented regulatory standards and inefficiencies that hinder seamless cross-border activity. Achieving full connectivity will require greater collaboration among regulators, industry participants, and technology providers to harmonise standards and reduce operational friction.

Managing Costs Amid Rising Competition

The financial ecosystem in Asia is under mounting pressure to manage costs while navigating rising competition and regulatory demands. In 2025, settlement operations will come into sharper focus, with the transition to T+1 cycles driving the need for faster, more resilient systems. This change ensures firms streamline processes and adopt advanced technologies to handle compressed timelines without sacrificing accuracy or operational stability.

Firms that invest in enhanced settlement infrastructure will not only meet these challenges but position themselves for long-term success. Scalable, interoperable systems that integrate seamlessly into existing workflows will be key to achieving this. While technology adoption may require upfront investment, the resulting efficiencies can significantly reduce risk, improve scalability, and maintain regulatory compliance.

At Calastone, we continue to support this transition utilising the existing network that seamlessly connects asset settlement with cash payment along with innovative solutions designed to enhance settlement efficiency, foster global connectivity, and provide the flexibility needed in an evolving market. Our approach ensures firms can adapt to the demands of T+1 while maintaining the resilience necessary to thrive in a competitive landscape.

Seizing the Opportunities Ahead

The opportunities presented by 2025 are vast and multifaceted. Tokenisation remains at the forefront, offering the potential for efficiency gains, enhanced liquidity, and customised investment products. Singapore continues to lead in this space, with initiatives like Project Guardian driving innovation. Hong Kong, while making progress, must accelerate its efforts to address regulatory readiness and compete effectively in the tokenisation race.

Cross-border connectivity is another critical area of opportunity. Seamless connectivity across jurisdictions is essential for unlocking new markets and enhancing liquidity. Calastone’s expertise and coverage in facilitating global connectivity positions it as a key enabler for firms navigating these complexities. By addressing cross-border challenges, firms can reduce operational barriers and expand their reach in an increasingly interconnected financial landscape.

Turning Potential Into Progress

2025 is set to be a transformative year for Asia’s financial markets, defined by the shift from planning to execution. The region’s financial hubs are at the forefront of this transformation, leveraging regulatory advancements, technological innovation, and strategic collaboration to overcome challenges and unlock growth.

Insights from industry discussions highlight a shared optimism for the future, with stakeholders emphasising the importance of aligning strategic initiatives with tangible outcomes. Firms that act decisively in addressing regulatory, technological, and operational challenges will not only secure their position as leaders in Asia’s financial ecosystem but also set the pace for global markets to follow.

As Asia embarks on this next phase of its digital journey, the focus is clear: to turn aspirations into action, experimentation into execution, and potential into progress. The firms that seize the opportunities of 2025 will shape the future of global finance, reinforcing Asia’s role as a beacon of innovation and connectivity.

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