Fintech Industry Market Research & Statistics

There is a wealth of personal finance apps built on banking APIs and of a differing level of sophistication. Large institutional players are increasing their allocation and attention to the sector, getting more and more involved, both through investing and building products. Compliance and regtech tools still developing as regulatory burden keep increasing – this can range from fraud prevention to AML to KYC. Professional investors, which can be categorized based on size , stage (seed, late venture, private equity, etc.), and finally for source of funds, such as pension funds, strategic investors, family offices, etc.

They were also becoming wealthier, and thus in need of increasingly complex financial products. Sales cycles are much longer, the customers can be more demanding, require a lot of bespoke features, and they often expect Fintech industry a degree of professional services to be provided together with tech products. However, they are also very lucrative and can provide income over several years if they find a solution to a real business problem.

In fact, the global fintech market was worth $127.66 billion in 2018, with a predicted annual growth rate of ~25% until 2022, to $309.98 billion. The financial technology sector is part of the broaderfinancial services industry, which encompasses markets such as banking, insurance, real estate and online finance. Many innovative companies that operate in financial services, such as P2P lenders, payment technologies companies, alternative investment platforms, digital or challenger banks, etc. The radical transformation of the financial services industry through fintech disruption is still underway. The regulatory tightening that started with the financial crash of 2008 is continuing at a strong pace, and thus forcing traditional players to embrace innovation.

Other companies, like Avant, are more like traditional lenders and are expanding in the credit card space. An important caveat for companies of this type is that they are constrained in their borrowing power by their own ability to fund. Not only that, but a failed crowdfunding round can be extremely damaging to a fledgling company. As discussed in our State of Venture Capital report, 2018, in particular, was a bumper year, with a total of $254 billion invested globally into ~18,000 startups through venture capital funds—a sharp increase of 46% from 2017’s total. Figures for 2019 are not yet completely finalized, but initial reports point to a slowdown in funding levels in the first half of the year and a mild rebound in Q3. This is true across sectors, and is most definitely true for the fintech sector, which is the largest sector in the growth company space.

What Does Fintech Stand For?

The consumer market is perhaps the most saturated, and also the easiest to conquer. Consumers, however, tend to have low loyalty, and be sensitive to design and experience initially, but then be swayed by price and convenience. In this section, we will cover the taxonomy of emerging categories, adding some insights and examples to each category and some fintech trends. 2018 was a record year for fintech – with the amount funded more than doubling compared to the previous year. 2019 has reversed the trend somewhat, with a normalization of volumes but still showing strong historical growth. The macroeconomic situation, particularly in the UK and in Europe, has deteriorated, slowing down funding to younger and newer companies.

Fintech industry report

BigTech firms have huge customer bases and data – and they’re now venturing into the financial services domain. • In July 2021, Hay launched a cloud native microservice, Hay-as-a-Service’ solution. This service is designed to offer quick, secure and customizable financial services processing for financial and non-financial organizations.

The market is maturing, with fewer but larger and later-stage deals taking place. The consumer and lender segments will face a strong consolidation, particularly if the macroeconomic situation deteriorates sharply. For example, Zopa, the British P2P lending company that was one of the pioneers in the sector , decided to become a bank in a process that has not been without its difficulties.

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It is also an interesting case study of how to build a great financial services firm. Another offering geared toward this clientele focuses on real estate and loan direct investing. HNWs are targeted as the supply-side of P2P or digital loan marketplaces, both for personal or SME loans, as well as direct investments in real estate projects. They are meant to streamline the private banking process, facilitating access to innovative asset classes and reducing portfolio rebalancing costs. Government entities, which can range widely from regulators, central banks, sovereign wealth funds, and all the authorities that grant licenses and can actively influence the financial sector.

• AI segment is expected to register relatively faster revenue CAGR throughout the forecast period. This can be attributed rising preference for AI technology due to various advantages such as quick and easy access of large algorithms, risk detection, secure operation, and others. It highlights the eight most interesting and innovative fintechs at the event based on the personal preferences of the author. AI applications and infrastructure are the most interesting areas for investment and more differentiated offering – the evolution of AI technology creates a fertile ground for new ideas. The continent is home to twice as many fintech companies as the APAC region.

Connected Marketing At High

Companies like Rocket Mortgage have unbundled a different part of the traditional lending business of banks. They have greatly benefited from the reputational damage that the mortgage business mistakes and collapse brought before the last decade, as well as from the change in consumer behavior and interactions with their financial service providers. Companies offer products that aid in the process of client onboarding, including companies that are developing solutions related to digital/cyber identity, biometric authentication, and fraud detection. Finally, in terms of geography, more and more mega-deals are happening in developing countries, where a large un- and underbanked population provided a very fertile ground for rapid growth. The mega valuation of Ant Financial (~$150 billion as of June 2019) is a great example of all of these different trends, and we will thus briefly cover it.

Pandemic induced VUCA environment has forced the investors to reconsider their funding decisions, as enthusiasm heads upward for late-stage mature FinTechs. Profitability FinTechs have followed a four-step strategy for long-term growth, leading to an intense competition industrywide. Covering banking in the FinTech era, the World FinTech Report 2021 from Capgemini and Efma explores how successful FinTechs have breached the profitability barrier and analyzes alternative options for banks to alleviate the competitive threat. Discover how banks can implement digital-only subsidiaries with the “right-field” approach to be successful in the FinTech era.

Just recently there has been quite a discussion about how greatly Fintech has influenced the economy and how ordinary people can look for lucrative options in the field. Consumers, as well as lenders, will find this article quite helpful when planning deals with their future financial transactions. Being a writer at Fit My Money, it is crucial for me to know the team of Fintech developers and business experts that would share their exceptional expertise in the field. I would love to see more of your insight on Fintech issue and the way consumers can relate to the topic.

This is an area of great focus, particularly for large banks, which are still adjusting to the changes in regulations that have come as a result of the financial crisis. Any company that offers a tool that can help not only streamline the process but also to reduce costs (banks spend up to 10% of their total costs on compliance – the amounts at play are staggering). As the sector evolves, and startups become more sophisticated and begin having access to larger amounts of capital, they are also starting a process of rebundling banking products and services. Ranging from cryptocurrencies to global account management and FX management, fintech in the payments industry offers a broad range of innovative solutions.

Ant Financial was previously known as Alipay, the payment tool for Alibaba. It was originally developed to help facilitate transactions on Taobao, the Chinese competitor to eBay. By creating trust among users, it enabled the explosive growth of the Alibaba group, led by Jack Ma. Alipay was then spun off from Alibaba and started offering a broader range of financial services. Alipay was effectively responsible, together with the Commercial Bank of China, for building the basic electronic payments network in the country. Previously, all payments were handled with paper transactions and had to pass through the People’s Bank of China.

Fintech industry report

Fintech stands for “financial technology” – any technology that helps companies in financial services to operate or deliver their products and services, or that helps companies or individuals to manage their financial affairs. We include regulatory technology but not cryptocurrency in the sector. It currently has 1.2 billion customers worldwide (¾ of whom are in China) and aims to grow to 2 billion over the next decade.

Banks must adopt a right-field approach using three-dimensional process to launch and run their digital subsidiaries, while preparing for their role as Bank of the Future. The lending space is very crowded, in the same manner as in the B2B space, creating a ripe environment for acquisitions and consolidation. Many new types of insurers are emerging, focusing on different types of end-user insurance (car, bicycle, etc.). This is the least capital-intensive type of insurance and the easiest to get off the ground – it is still very early to see a real disruption along insurance lines. With no rigid standardization guidelines or non-compliance penalties, total and efficient compliance may take more time, as 18% of survey respondents said they are still in the compliance implementation stage. There were 879 press releases posted in the last 24 hours and 190,244 in the last 365 days.

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As the market and the fintech landscape are maturing, now is the time to see which companies are here to stay and can become profitable – there will be some necessary consolidation and perhaps some high-profile failures. Now is the time to see which companies are here to stay and can become profitable – there will be some necessary consolidation and perhaps some high-profile failures. In the wake of open banking, banks explore customer-centric propositions and the use of APIs to enable data sharing.

  • This practice had, at times, a negative impact on customer service levels and pricing power, as it became quite difficult for a client with a complex set of products and long-standing relationships to disentangle itself and change provider.
  • We include regulatory technology but not cryptocurrency in the sector.
  • This service is designed to offer quick, secure and customizable financial services processing for financial and non-financial organizations.
  • 2019 has reversed the trend somewhat, with a normalization of volumes but still showing strong historical growth.
  • Under this definition, we include regulatory technology but not cryptocurrency strictly in the sector .

Retail banking segment accounted for largest revenue share in the global market in 2020. Financial services, as an industry, has traditionally had extremely high barriers to entry. This has allowed traditional banks to cross-sell to their clients heavily, which, in turn, increased the stickiness of the business. This practice had, at times, a negative impact on customer service levels and pricing power, as it became quite difficult for a client with a complex set of products and long-standing relationships to disentangle itself and change provider. The new generation of lending and crowdfunding platforms are marketplaces that help the two sides of the transaction by standardizing the process and helping with marketing and legal materials.

Segmentation By Customer

TransferWise is the European unicorn that was recently valued at $3.5 billion after the founders sold a stake. Natasha transitioned to venture capital after a career in banking, built in prestigious firms such as JPMorgan and A&M. She is now a part of the investment team at a venture capital fund, where she evaluates over 1,000 startups a month. She also has hands-on experience with startups, helping CyNation and EstateGuru raise funding and expand to the UK. She joined Toptal to keep her skills up to date and help entrepreneurs access funding.

It has a range of initiatives such as an accelerator, outside acquisitions, and a venture capital investment team that invests the bank’s own funds . Artificial intelligence and machine learning-powered platforms to manage core business processes. These are support tools for operations that are intrinsic to the complexity of financial services and are either paper- or data-intensive. These are instruments that allow users to analyze data, mostly either to provide decision-making support or to detect anomalies. This is the new state-of-the-art approach to fraud detection and compliance to anti-money laundering laws, adopted by companies like FICO and Finastra. We define fintech technology as any technology that helps companies in financial services to operate or deliver their products and services, or that helps companies or individuals to manage their financial affairs.

These platforms transform a service that, to many users, seems complex and difficult to dominate into something straightforward and almost playful. In addition, they are also used to connect to customers, either to improve user experience through perceived empathy or otherwise to provide data-powered assistance at a lower cost. The range of applications is very large but quite common in wealth and investment management. A good example is Nutmeg, a so-called robo-advisor that provides automated asset allocation services and advice through machine learning. Nutmeg recently received a cornerstone investment from Goldman Sachs, which has also partnered with it to start delivering their wealth services to retail clients. Some key applications of fintech are retail banking, stock trading firms, investment banking, hedge funds, and others.

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The focus here is providing improved user experience which is scalable. This can happen because the improvements are powered by simple processes, simple decisions to make on the part of the client, simplified reporting, and all presented with a captivating UX/UI design. This approach is mainly used to address processes like wealth management, life insurance, or loan subscription.

Failing to do so would have meant losing its preliminary banking license. Ant Financial is, as of the summer of 2019, the most valuable unicorn in the world, after it had a reported valuation of around $150 billion. To put that in perspective, it makes Ant Financial approximately as valuable as Goldman Sachs ($79.46 billion) and Morgan Stanley ($79.05 billion) combined.

Under this definition, we include regulatory technology but not cryptocurrency strictly in the sector . Some other reports may use a different breakdown and thus show slightly different total https://globalcloudteam.com/ figures. It is worth noting that most of the underlying “plumbing” (i.e., the nuts and bolts that underpin financial transactions) is still almost entirely provided by traditional banks.

Natasha transitioned to venture capital after a career in banking built in prestigious firms such as JPMorgan and ESM. The lending space is very crowded, in a similar vein as the lending space for consumers – the most established players will survive but a consolidation is to be expected. Benefits and business banking services are also becoming more popular. Small and medium enterprises offer great opportunities for the fintech entrepreneurial community. SMEs struggle with the increased complexity imposed on them by changing technologies and do not often have the resources to build inhouse tools.

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