The fintech industry is forecasted to grow from US$ 49,920 million in 2022 to US$ 113,670 million by 2030 with a compound annual growth rate (CAGR) of 14.7%. The financial technology sector is an emerging industry that aims to disrupt traditional financial methods by incorporating new technologies into the field.

The Emergence of Fintech

Fintech combines the use of technology with financial services. It is a term that is commonly used to describe the latest financial solutions that are developed using innovative technologies. The fintech ecosystem is currently being driven by non-financial startups that are capitalizing on the changing banking habits of consumers. Ultimately, financial institutions are the ones who benefit the most from fintech’s capabilities.

Market Segments

The P2P lending segment accounted for over 56% of the fintech market, and it is expected to continue leading in the future. P2P lending is a popular way for borrowers to secure loans, allowing investors to accurately gauge their investments’ level of risk. In 2020, the large enterprise segment accounted for more than half of the market, which is expected to remain constant during the forecast period.

Market Dynamics

Several factors are driving the growth of the fintech investment market. One significant driver is the increasing independence of banking services. Top banks are strategizing to deal with competition from fintech platforms by developing payment technologies for smartphones. Searching for equity investments is now done online, where many venture capitalists are investing. Blockchain technology and digital wallets are other factors driving the fintech market.

Trends

Fintech startups in New York, Silicon Valley, London, and Australia are flourishing, providing their clients with services such as tech-assisted payments, crowdfunding, online lending, currency exchange, and wealth management. This has put them in a better position than banks and traditional financial systems that have been around for a long time. The market picture is better than in 2011, where investors did not invest much money in fintech because banks were focused on cutting costs. Today, major banks are helping fintech startups start-up, invest, or work with them, demonstrating the financial institutions’ value of using digital transformation.

Challenges

The main challenge in the fintech industry is privacy and security concerns. Payment service providers may collect personal data and information about their customers for advertising purposes, but this method could violate customers’ privacy. Location-based services pose privacy concerns, such as geo-based information in real-time that can be used for malicious purposes. As a result, customers are fearful of trading online, which could hurt the fintech platform market.

Regional Outlook

The fintech investment market is segmented into North America, Europe, Asia Pacific, Latin America, the Middle East, and Africa. The North American market is the most profitable regional market in the global fintech investment market, with new tech support companies entering the financial services market, offering loans for education. The Asia-Pacific fintech investment market is projected to grow the fastest due to open banking and other regulatory changes in the region.

Top Market Players

Several top players in the fintech investment market include Oscar, Qufenqi, Wealthfront, ZhongAn, Atom Bank, Avant, and Funding.

Source: Contrive Datum Insights Pvt Ltd