Fintech Technologies Market

fintech technology market
illustration image of fintech technology market – The sales of technology- and platform-based financial services and other associated goods make up what is known as the “Fintech Technologies Market” (Financial Technologies). The provision of financial services by means of internet-based platforms is one example of the application of technology and innovation known as “FinTech.”

The companies that compete in this fintech technologies market industry offer end-to-end process financial services and solutions to automate financial procedures through the internet. In order to automate insurance, trading, banking services, and risk management, end-user firms make use of it in the back end of their operations.

FinTech firms can span a wide range of services, from those that offer more typical banking services such as payment services and fund transfers, to those that are technologically focused and offer services that enhance the procedures that are employed in the major financial markets. FinTech companies first began as purely technological businesses with the goal of the fintech technologies market or facilitating activities within the financial industry.

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 marketplace lending to consumers. Specifically, mobile point of service (POS) payments have become increasingly popular.

Fintech Market Size

The global market for fintech products and services had a value of nearly $111,240.5 million in 2019, having risen at a compound annual growth rate (CAGR) of 7.9% since 2015. It is anticipated that the market will expand at a CAGR of 9.2% to reach nearly $158,014.3 million by the year 2023. In addition, it is anticipated that the market would increase to $191,840.2 million in 2025 at a compound annual growth rate (CAGR) of 10.2% and then to $325,311.8 million in 2030 at a CAGR of 11.1%.

A rise in disposable income, an increase in internet penetration, greater funding and investments in fintech firms, and an increase in the number of people with access to the internet all contributed to growth over the historical period. In the historical period, growth was badly impacted by factors such as rigorous government laws and a lack of human touch.

In the future, the market is anticipated to be driven by the rising acceptance of digital payment methods, the growing number of investments in blockchain technology as a result of the high efficiency with which it manages data, the exponential expansion of e-commerce, and the implications of COVID-19. The biggest reason that poses a threat to the expansion of the financial technology market in the future is one that centers on the safety of the data that is collected from customers.

Fintech Market Drivers

The following are some of the primary forces propelling the fintech market:

The Concentration of Big Tech on Financial Services The fact that large technology companies such as Google, Amazon, Facebook, and Apple are concentrating their efforts on financial services is expected to have a beneficial impact on the expansion of the market for fintech.

The large technology companies are continually adding ancillary banking services to their existing product lines, but they have no plans to fully integrate banking operations. For example, the social media company Facebook hoped to launch a digital currency known as Libra that would facilitate faster and more affordable payments on a global scale.

However, Facebook has suffered a significant loss of financial support and has been subjected to intense regulatory scrutiny as part of a federal privacy investigation. In addition to Libra, Facebook is in the process of unifying its payment products under a single brand that will be known as Facebook Pay.

They will have to contend with rivals in the form of comparable payment applications such as Google Pay and Apple Pay in the United States, as well as payment apps from China such as Alipay and WeChat Pay. As a result, large technology companies that are concentrating on financial services are likely to have a beneficial impact on the expansion of the FinTech business.

Fintech Market Restraints

The following are some of the primary factors holding back the fintech market:

Concerns Surrounding the Security of Consumer Data The expansion of the financial technology (FinTech) business is being hampered by concerns regarding the security of consumer data.

The consumers of the organizations that provide FinTech services are the subjects of a massive amount of data collection, which may contain personal information as well as other financial records.

For the purpose of tracing a customer’s digital footprint, many FinTech organizations also collect data on the customer’s online spending activity as well as their activities on social media. This data is collected for the purpose of analysis in fields such as marketing and sales, as well as financial decision-making, such as the generation of a credit score to identify the risk profile of a customer.

This indicates that a significant quantity of personally identifiable information and other sensitive data may be susceptible to data breaches and may be accessed by nefarious entities. Loss of data, breaches of data security, insertion of malware, hacking of user accounts, and abusive use of cloud services are some of the primary security concerns facing businesses operating in the FinTech industry.

For example, in 2017, hackers broke into the software platform of one of the leading FinTech businesses, Equifax Inc., and acquired the sensitive personal information of more than 143 million Equifax clients in the United States and Canada. Customers’ increased mistrust as a result of incidents like this over the secure handling of private information is hampering the expansion of the financial technology business.

Fintech Market Trends

Implementation of blockchain technology is one of the major trends that is shaping the financial technology market.

Blockchain technology is being used by a growing number of companies operating in the global fintech market to improve both their security and their operational efficiency. Blockchain is a system that entails the development of a distributed database that is accessible to all users across a network. Within this database, each user has the ability to contribute a new data record (block), which is stamped with an unchangeable timestamp. The authentication of data is preserved by blockchain technology, which restricts changes to older data blocks while enabling users to continue adding new data blocks.

As a result, blockchain technology offers high levels of security and transparency to businesses that are active in the fintech market. It makes trades more accurate, speeds up the process of settling them, and lowers the risks involved. According to the PricewaterhouseCoopers (PwC) FinTech report, by the end of 2020, 77% of financial institutions plan to incorporate blockchain technology into their operations, and 90% of payment companies plan to use blockchain technology. Both of these statistics are expected to occur.

An Increasing Prevalence Of The Use Of Mobile Payment Technology

The younger population is increasingly adopting new trends, such as the rise of mobile payment technologies. A mobile wallet is a sort of digital wallet that allows the user to make payments, view account information, and pay for services by way of an application on their smartphone. The information regarding the payment card is stored within the mobile wallet software itself, which helps to expedite the entire process of making a payment. The proliferation of smartphones is likely responsible for the growing popularity of mobile wallets, which in turn can be linked to the growing number of people who own smartphones. By the end of 2019, there were approximately 3.2 billion people using smartphones worldwide, as stated in a report by NewZoo. As a result, there are more people who use mobile wallets now that there are more people who use mobile phones. The market for mobile payments is estimated to reach $190 billion by 2021, up from its current valuation of approximately $114 billion in 2019.

Opportunities and Suggestions Regarding the Financial Technology Market

Opportunities The insurance market is projected to gain $15,343.3 million in global annual sales by the year 2023, making it the sector of the FinTech market with the most promising growth potential in terms of the type of service. The market for payment processors is projected to reach a value of $22,163.8 billion in annual sales around the world by the year 2023. This represents the highest growth potential of any type of service provider in the FinTech industry. The others market is expected to generate $22,727.3 million in additional global annual revenues by the year 2023, making it the segment of the FinTech market with the greatest development potential in terms of technology. In China, the size of the FinTech market is expected to grow by the largest, reaching $19,664.4 million.

Recommendations – The Business Research Company suggests that the companies that manufacture fintech products concentrate their efforts on the newly emerging block chain technology, form strategic alliances with other financial organizations to expand their customer base, investigate the possibility of incorporating artificial intelligence into their business operations to improve both cost and time efficiency, and keep data security a top priority. In the FinTech industry, player-adopted tactics include things like investing in new product innovations and incorporating creative features in products in order to strengthen business, as well as expanding business into other countries via sustainable investments and acquisitions.

Fintech Market Segmentation

The financial technology market can be broken down into four distinct categories: service type, service provider, technology, and geographic region.

By Type of Service – The market for fintech can be divided into the following categories: a) Payments; b) Wealth Management; c) Insurance; d) Personal Loans; e) Personal Finance; f) Fund Transfer; and g) Others.

In 2019, the insurance market accounted for $54,831.4 million, or 49.3% of the entire market, making it the largest section of the FinTech market by type of service. A compound annual growth rate of 23.9% is projected for the fund transfer market over the next few years, making it the sector with the most potential for expansion.

According to the kind of service provider, the financial technology market can be divided into the following categories: a) Payment Processors; b) Securities Brokerages and Investment Firms; c) Banks; d) Non-Banking Financial Companies; and e) Others.

In 2019, the payment processors market was the largest section of the FinTech industry by type of service provider, accounting for $46,701.3 million or 42.0% of the total market. It is also anticipated that this market will be the segment with the highest CAGR moving forward, at 10.2%.

By Technology – The financial technology market can be divided into the following categories: mobile commerce and transfers; robotic process automation; data analytics; and other categories.

Mobile commerce and transfers was the second largest section of the FinTech industry by technology in 2019, accounting for $21,955 million or 19.7% of the entire market. In other words, mobile commerce and transfers was the second largest segment of the market by technology. The market for robotic process automation is anticipated to be the sector with the highest compound annual growth rate over the coming years at 15.8%.

The financial technology market can be broken down into the following categories: 

  • North America
  • US versus Western Europe
  • UK
  • Germany
  • France o Asia Pacific
  • China
  • Japan\sIndia
  • Australia
  • Indonesia
  • The Eastern European region or South Korea
  • The Russian Federation or South America
  • Brazil o Middle East o Africa

In 2019, the market for financial technology was led by the North American area, which accounted for 40.8% of the total market worldwide. After that, Asia Pacific, Western Europe, and the other areas came in second through fifth place, respectively. Asia-Pacific and South America will have the highest compound annual growth rates (CAGRs) in the financial technology industry from 2019-2023, with 13.7% and 12.6% growth rates, respectively. These regions will be the market leaders in the future.

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