Fintech Market Definition
The FinTech (Financial Technologies) market consists of sales of technology and platform based financial services and related goods. FinTech is the use of technology and innovation to provide financial services through internet-based platforms. Companies in this market provide end-to-end process financial services and solutions to automate financial processes over the Internet. It is used by end-user organizations on the back end to automate insurance, trading, banking services, and risk management.
FinTech companies can cover many services, ranging from those offering more traditional banking services such as payment services and fund transfers, to those that are technologically focused offering services that enhance the processes in the major financial markets. FinTech companies started as exclusively technology companies to improve or assist activities in the financial sector. As the market has developed, these companies have evolved as an alternative to traditional financial services providers by offering a wide range of financial services including mobile point of service (POS) payments, crowd lending to businesses and market place lending to consumers.
Fintech Market Size
The global Fintech market reached a value of nearly $111,240.5 million in 2019, having grown at a compound annual growth rate (CAGR) of 7.9% since 2015, and is expected to grow at a CAGR of 9.2% to nearly $158,014.3 million by 2023. Also the market is expected to grow to $191,840.2 million in 2025 at a CAGR of 10.2% and to $325,311.8 million in 2030 at a CAGR of 11.1%.
Growth in the historic period resulted from growth in the emerging markets, increased funding and investments in fintech startups, rising internet penetration, and increase in disposable income. Factors that negatively affected growth in the historic period were stringent government regulations, and lack of human touch.
Going forward, increasing popularity of digital payments, increasing investments in blockchain technology due to its high efficiency in data management, exponential growth of e-commerce, and implications of COVID-19 are expected to drive the market. Concerns regarding the security of consumer data is a major factor that could hinder the growth of the Fintech market in the future.
Fintech Market Drivers
The key drivers of the fintech market include:
Big Tech Focus On Financial Services - Big Tech companies that include Google, Amazon, Facebook and Apple are aiming at financial services, which positively impacts the growth of the FinTech market. The big tech firms keep introducing peripheral banking services to their current offerings, without going full-stack banking. For instance, Facebook, the social media firm wanted to introduce a digital currency that makes global payments cheaper and faster, called Libra. However, Facebook has lost many of its backers and faced stiff regulatory scrutiny in a federal privacy probe. Apart from Libra, Facebook is also consolidating its payment products under a new brand called Facebook Pay. They will face competition from the similar payment apps such as Google Pay and Apple Pay in the US and Chinese payment apps such as Alipay and WeChat Pay. Therefore, big tech companies focusing on financial services are expected to positively impact the FinTech market’s growth.
Fintech Market Restraints
The key restraints on the fintech market include:
Consumer Data Security Concerns - Concerns regarding security of consumer data is restraining the growth of the financial technology (FinTech) market. FinTech companies collect a large quantum of data about their customers, which include personal information and other financial records. Many FinTech companies also collect data on a customer’s online spending behavior and social media patterns, to trace their digital footprint. This data collected is used for analysis in domains like marketing, sales, and financial decision-making like generating credit score to determine a customer’s risk profile. This means a large amount of personal and sensitive data is potentially vulnerable to breaches and can be accessed by malicious entities. Some major security issues for companies operating in the FinTech market include data loss, data breaches, malware injection, hacking of accounts and abuse of cloud services. For instance, in 2017, hackers breached one of the top FinTech companies, Equifax Inc.’s software platform and accessed sensitive personal information of 143 million+ Equifax customers in the United States and Canada. Such instances are resulting distrust in customers regarding secure handling of private information, thus restraining the growth of the FinTech market.
Fintech Market Trends
Major trends influencing the fintech market include:
Implementation Of Blockchain Technology
Companies in the global fintech market are increasingly using blockchain technology for better security and operational efficiency. Blockchain is a technology which involves the implementation of a distributed database that is accessible to all the users over a network, where each user can add a new data record (block), with a timestamp that cannot be altered. Blockchain technology maintains the authentication of data by restricting changes in older data blocks while allowing the users to continue adding new data blocks, thus, providing high security and transparency to companies operating in the fintech market. It enhances trade accuracy, speeds up the settlement process, and reduces risks. As per the Pricewaterhousecoopers (PwC) FinTech report, by 2020, 77% of financial organizations plan to integrate blockchain into their operations & 90% of payment companies plan to use blockchain by the end of 2020.
Increasing Use Of Mobile Payment Technology
Rise of mobile payment technology is a trend adopted by the current generation. A mobile wallet is a type of digital wallet that enables the user to process payments, access account information, and pay for services through a smartphone application. To speed up the entire payment process, the mobile wallet stores details about the payment card on the app itself. Mobile wallets are on the rise and the reason for the large acceptance of mobile wallets can be attributed to the increasing number of smartphones. According to a report by NewZoo, there were nearly 3.2 billion smartphone users by the end of 2019. Therefore, with more mobile users, there are more mobile wallet users. The mobile payments market is around $114 billion in 2019 and is expected to reach $190 billion by 2021.
Opportunities And Recommendations In The Fintech Market
Opportunities – The top growth potential in the FinTech market by type of service will arise in the insurance market, which will gain $15,343.3 million in global annual sales by 2023. The top growth potential in the FinTech market by type of service provider will arise in the payment processors market, which will gain $22,163.8 million in global annual sales by 2023. The top growth potential in the FinTech market by technology will arise in the others market, which will gain $22,727.3 million in global annual sales by 2023. The FinTech market size will gain the most in China at $19,664.4 million..
Recommendations – To take advantage of these opportunities, The Business Research Company recommends the Fintech manufacturing companies to focus on emerging block chain technology, partnering with other financial organizations to grow their customer base, considering implementing artificial intelligence in their operations for cost and time efficiency, and maintaining data security. Player-adopted strategies in the FinTech industry include investing in new product developments and integrating innovative features in products to strengthen business, and expanding business in other regions through sustainable investments and acquisitions.
Fintech Market Segmentation
The fintech market is segmented by type of service, by service provider, by technology and by geography.
By Type Of Service -
The fintech market can be segmented by type of service into
- a) Payments
- b) Wealth Management
- c) Insurance
- d) Personal Loans
- e) Personal Finance
- f) Fund Transfer
- g) Others
The insurance market was the largest segment of the FinTech market by type of service, accounting for $54,831.4 million or 49.3% of the total market in 2019. The fund transfer market is expected to be the fastest-growing segment going forward at a CAGR of 23.9%.
By Service Provider -
The fintech market can be segmented by service provider into
- a) Payment Processors
- b) Securities Brokerages And Investment Firms
- c) Banks
- d) Non-Banking Financial Companies
- e) Others
The payment processors was the largest segment of the FinTech market by type of service provider, accounting for $46,701.3 million or 42.0% of the total market in 2019 and this market is also expected to be the fastest-growing segment going forward at a CAGR of 10.2%.
By Technology -
The fintech market can be segmented by technology into
- a) Mobile Commerce And Transfers
- b) Robotic Process Automation
- c) Data Analytics
- d) Others
The mobile commerce and transfers was the second largest segment of the FinTech market by technology, accounting for $21,955 million or 19.7% of the total market in 2019. The robotic process automation market is expected to be the fastest-growing segment going forward at a CAGR of 15.8%.
By Geography- The fintech market is segmented into
- o North America
- o Western Europe
- o Asia Pacific
- China
- Japan
- India
- Australia
- Indonesia
- South Korea
- o Eastern Europe
- o South America
- o Middle East
- o Africa
North America was the largest region in the FinTech market, accounting for 40.8% of the global market in 2019. It was followed by Asia Pacific, Western Europe and the other regions. Going forward, the fastest growing regions in the FinTech market will be Asia-Pacific and South America, where growth will be at CAGRs of 13.7% and 12.6% respectively from 2019-2023.
Fintech Competitive Landscape
Major Competitors are:
- • PayPal Holdings, Inc.
- • Ant Financial Services Group
- • Tencent Holdings Ltd.
- • Square, Inc.
- • Envestnet, Inc.
Other Competitors Include:
- • Shopify Inc.
- • SoFi Inc.
- • LendingClub Corporation
- • Adyen N.V.
- • Xero Limited
- • Kabbage
- • Avant Inc
- • Stripe
- • Robinhood
- • Plaid
- • Chime
- • Ripple
- • Coinbase
- • Checkout
- • Darktrace
- • Revolut
- • Sumup
- • Radius Payment
- • Greensill
- • Transferwise
- • Oaknorth
- • Worldremit
- • Zopa
- • Atom Bank
- • Starling Bank
- • Monzo
- • Funding Circle
- • Paytm
- • Bill Desk
- • Pine Labs
- • Incred
- • Mobikwik
- • Razorpay
- • Lending Kart
- • Coverfox
- • bankbazaar
- • Policy Bazaar
- • Capital Float
- • Ofbusiness
- • Mswipe
- • Ant Financial
- • Qudian
- • Lufax
- • ZhongAn
- • Bitmain Technologies
- • Du Xiaoman Financial
- • Dianrong
- • JD Finance
- • Ping An Technology
- • Renrenxing technology
- • Tencent
- • Tiger Brokers
- • Freee
- • Quoine
- • Tech Bureau
- • WealthNavi
- • Origami
- • Finatext
- • OneTap Buy
- • Folio
- • Money Design
- • Paidy
- • Double Data
- • LifePay
- • QIWI
- • PayURomania
- • CreamFinanace
- • KredytMarket
- • Twisto
- • Moni
- • Nubank
- • PagoFlash
- • Seguro Simple
- • Facturedo
- • Geru
- • Afluenta
- • Alegra
- • Paytabs
- • Colu
- • Souqalmal
- • Bayzat
- • Aqeed
- • Branch
- • Tala
- • Cellulant
- • Jumo
- • Paga
- • OneFi
- • Yoco
- • Zoona
- • MyBucks