Market Research Report Fintech Industry 2022
Report Overview
The FinTech (Financial Technologies) market sells financial services and associated products based on technology and platforms. FinTech is the term that describes the financial assistance provided via web-based media using technology and innovation. Businesses in this market offer solutions to automate financial operations over the Internet and end-to-end financial services processing. On the back end, end-user organizations use it to automate risk management, trading, insurance, and banking services.
The fintech market as a service was valued at USD 232.14 billion in 2021, and it is expected to grow at a CAGR of 17.2% from 2022 to 2030. Solutions for fintech as a service (FaaS) range from card issuance to payment processing to fraud detection. The growth of mobile payments, the use of AI technology, and investments in fintech infrastructure are all factors contributing to the market’s expansion. Due to consumers’ growing preference for digital financial services, the market is growing.
The market is expected to grow due to the growing adoption of innovative technologies, including blockchain, open banking, cloud & big data analytics, voice bots, and digital payments. Banks and other financial institutions attempt to incorporate new technology into their offerings. These developments in technology have made it possible to borrow, invest, transfer, and save money virtually. Therefore, the market for fintech as a service platform is anticipated to grow due to technological developments in the fintech industry.
Fintech businesses increasingly receive funding from venture capitalists due to their constant efforts to improve established practices. These investments help companies offer several benefits, such as lower service costs, faster turnaround times, widespread use of blockchain technology, and automated banking systems. The fintech platform frequently implements these advantages.
International governing bodies typically urge businesses that offer digital financial services to diversify their product portfolios. As an illustration, USAID introduced “Digital Invest” in April 2022, a new economic program to use private funding for internet service providers (ISPs) and digital banking to serve traditionally underserved consumer communities internationally. Consequently, there will be numerous market expansion opportunities throughout the forecast period.
Consumers are worried about their security and privacy as these financial services become more digital. But a better user interface (UI) and better security and privacy for user data will give the market a chance to grow. Also, it is expected that the inability of older users to keep up with changing technology will slow the market’s growth.
The total value of investments into fintech companies worldwide from 2010 to H1 2022
The total value of fintech companies worldwide has dramatically increased between 2010 and 2019. When it reached 215.1 billion US dollars, the overall value of investments in fintech companies worldwide surged rapidly. In 2020, investments by fintech companies fell by more than a third, to 127.7 billion dollars. However, in 2021, investments rose again to 226.5 billion dollars. Nearly 80% of all investments in the sector were made in the Americas, which attracted the bulk of them.
Covid-19 Pandemic
The COVID-19 pandemic has significantly impacted the fintech technologies sector because consumers worldwide are increasingly using and adopting online and digitalized financial product lines. Lenders and investors are also boosting the capital and technology funding of Fintech providers. As a result, fintech innovations are helping to lower service delivery costs, expand the number of people who can be reached, and lessen the need for in-person interactions during the pandemic. For the reduction of poverty and the expansion of the economy, access to affordable financial services is crucial. This has consequently become one of the main growth factors for the fintech technologies market during the current global health crisis.
Regional Analysis
In 2021, North America dominated the global fintech-as-a-service market, accounting for more than 34.57% of the total revenue. The market in North America is expected to increase due to the region’s residents’ growing desire for digital financial services. For instance, according to MasterCard Contactless Consumer Polling, 51% of customers in the United States use a contactless payment method. Due to consumers’ evolving preferences for fintech services and electronic payment systems, the market is expanding.
The highest CAGR of 18.0% is anticipated to occur in Asia Pacific throughout the projection period. The regional market expansion can be attributed to a growing understanding of the advantages of FaaS platforms in nations like China, India, and Japan. Venture capitalists and governments are providing aggressive funding to fintech companies to promote digital services and fintech as a service platform. For instance, funding for fintech businesses in the Asia Pacific region raised USD 3.3 billion in the first quarter of 2022.
Market Dynamics
Market Drivers
In 2021, North America dominated the global fintech-as-a-service market, accounting for more than 34.57% of the total revenue. The market in North America is expected to increase due to the region’s residents’ Big tech firms like Google, Amazon, Facebook, and Apple are focusing on the financial services sector, which is helping the FinTech market expand. Big tech companies continue to add ancillary banking services to their current offerings without adopting full-stack banking. For instance, Facebook, a social media company, wanted to introduce Libra, a virtual currency that facilitates quicker and cheaper international transactions. But as part of a federal privacy investigation, Facebook has lost many of its supporters and is currently the subject of intense regulatory scrutiny. Facebook is also grouping its payment services under a new name, Facebook Pay, in addition to Libra. They will face competition from Chinese payment applications like Alipay and WeChat Pay and competing for US payment apps like Apple Pay and Google Pay. The growth of the FinTech market is therefore anticipated to be positively impacted by large tech companies that concentrate on financial services.
Market Restraints
The market for financial technology (FinTech) is experiencing growth restrictions due to worries about consumer data security. FinTech businesses gather many data about their clients, including personal and other financial records. Many FinTech companies collect data on social media usage and online spending habits and track a customer’s digital footprint. This information is gathered for marketing, sales, and financial decision-making analysis, such as creating credit scores to assess a customer’s risk profile. This implies that a sizable amount of sensitive and personal data is potentially exposed to breaches and accessible to bad actors. Data breaches, account hacking, malware injection, data loss, and improper use of cloud services are some of the main security issues facing businesses engaged in the FinTech sector. For instance, in 2017, a software platform breach at one of the top FinTech companies, Equifax Inc., allowed hackers access to sensitive personal data belonging to more than 143 million Equifax customers in the United States and Canada. Such incidents are raising customer doubts about the secure handling of their personal information and limiting the growth of the FinTech market.
Leading fintech unicorns worldwide in terms of market value in 2nd quarter 2022
In the 2nd quarter of 2022, Stripe was the most valuable fintech unicorn worldwide, with a market valuation of 95 billion U.S. dollars. Swedish online financial services provider Klarna ranked 2nd, with a market valuation of 45.6 billion U.S. dollars. Checkout.com, Revolut, and FTX followed it.
Key Players
Accenture, Inc.
FIS
Infosys Limited
Diebold Nixdorf
Cognizant Technology Solutions Corporation
CA Technology, Inc.
Ant Group
Avant, LLC
International Business Machines Corporation
Fiserv, Inc.
Question and Answers
The fintech market as a service was valued at USD 232.14 billion in 2021, and it is expected to grow at a CAGR of 17.2% from 2022 to 2030.
In 2020, investments by fintech companies fell by more than a third, to 127.7 billion dollars. However, in 2021, investments rose again to 226.5 billion dollars.
The market in North America is expected to increase due to the region’s residents’ Big tech firms like Google, Amazon, Facebook, and Apple are focusing on the financial services sector, which is helping the FinTech market expand.
The market for financial technology (FinTech) is experiencing growth restrictions due to worries about consumer data security. FinTech businesses gather many data about their clients, including personal and other financial records.
In the 2nd quarter of 2022, Stripe was the most valuable fintech unicorn worldwide, with a market valuation of 95 billion U.S. dollars. Swedish online financial services provider Klarna ranked 2nd, with a market valuation of 45.6 billion U.S. dollars. Checkout.com, Revolut, and FTX followed it.