Fintech Market

GLOBAL FINTECH MARKET SIZE

The global market size is predicted to be worth USD 644.6 Billion by 2029 from USD 209.7 billion in 2024, growing at a CAGR of 25.18% from 2024 to 2029.

Fintech is the short form of financial technology. In the last couple of years, the concept of fintech gained immense popularity and has transformed the way businesses operate. Fintech is on its way to emerging further and offering businesses opportunities to change their approach to customer-centric. Across the world, several companies that range from start-ups to established companies have been trying to take an active position in the space of fintech. Considering the growing adoption of fintech, companies that offer financial services and technology services have been working together to develop innovative and disruptive technologies to align with the constantly changing business scenario. Fintech is likely to replace several traditional services in various sectors such as payments, electronic commerce, banking, social commerce, wealth management and others.

The e-commerce industry is growing rapidly and has emerged as the major application of Fintech.

• For instance, as per Statista, global e-commerce sales were valued at USD 5.8 trillion in 2023 and this number is anticipated to reach USD 8 Trillion by 2027.

With the growing number of people using smartphones to make online transactions and increasing awareness among businesses and consumers regarding the abilities of Fintech to improve the customer experience by providing convenience in payments and delivery in e-commerce, the global fintech market is likely to set new standards in the coming years,

MARKET DRIVERS

The growing use of smartphones to access financial services drives the fintech market growth.

In the last few years, the usage of smartphones and mobile apps has increased tremendously and brought significant changes in the way financial services are being accessed. On the other hand, the demand for digital payments has been skyrocketing, which is fuel adding fuel to the demand for fintech services.

• For instance, as per the projections of Statista, the number of smartphone users was 2.5 billion in 2020, and this number hiked to 3.9 billion in 2023 and is likely to hit 6.1 billion by 2029.
• According to an app marketing company called Adjust, the number of installs of fintech apps grew by 50% between 2022 and 2023, whereas this number increased by just 2% between 2021 and 2022.

The growth in the number of smartphone users and the launch of the fintech mobile apps are likely to increase further in the coming years, and the same kind of growth can be noticed in the market.

The rapid adaptation trends of fintech in small and medium-sized enterprises (SMEs) propel market growth.

The adoption of fintech services among clients has grown at a rapid rate in the last few years. Fintech helps SMEs meet their financial needs, such as banking and payments, financial management, financing, and insurance.

• In Asia, SMEs are pivotal, registering about 42% of GDP and accounting for almost 50% of all jobs. Nonetheless, SMEs received only 19% of total bank credit in 2017. According to World Bank statistics, increasing credit to SMEs is an hourly necessity because at least 1 million new jobs are needed monthly to satisfy the growing Asian workforce.

With a global adoption rate of 25%, this market presents many growth opportunities for fintech companies. In addition to credit financing, there are several ways that SMEs can benefit, such as using APIs and distributed accounting technologies to achieve process efficiency, these are some examples where SMEs can benefit from the ecosystem of Fintech.

Technological advancements contribute to the global market expansion.

FinTech strengthens the security of financial data. Cybersecurity is becoming a worrying challenge in information technology. Organizations are vulnerable to financial loss due to cyber-attacks, so they invest heavily in FinTech. FinTech not only ensures the security of financial data but also instils convenient transactions, leading to smooth operations and perfect cash flow in the financial system.

• For instance, as per the information by KPMG, fintech companies have received a record high of USD 168 billion in investments in 2021.

An increase in the global population using mobile banking applications boosts market growth.

Considering the ease of use and convenience, more and more people worldwide have been shifting to use online banking services instead of traditional banking services. In the contemporary world, each bank has its own mobile application that allows customers to transact online and transfer money to other users around the world, which creates a significant FinTech market for providers to capitalize on demand from various banks.

• For instance, according to Forbes, 76% of Americans have used a banking app between April 2023 and March 2024.

MARKET RESTRAINTS

The regulations from the governments of several countries, along with strict rules that limit the operability of FinTech applications, are a significant restraint.

Unfortunately, the market growth is overshadowed by government regulations with strict rules that limit the operability of FinTech applications. Also, there is a notable lack of human contact in these apps, which is sometimes combined with the additional convenience fees applicable to transactions, and this is quite evident from the fact that many accounts created in FinTech mobile apps are idle. However, the future foresees less stringent government rules, advanced data security and a greater preference for FinTech applications by people, which will drive the growth of demand for them.

The fintech sector has yet to gain favorable regulations in many countries. In the recent past, the regulatory crackdown of China on peer-to-peer lending platforms resulted in the closure of several P2P lending platforms and impacted the fintech sector badly. A similar situation is also encountered in India as well. In India, the Reserve Bank of India imposed restrictions such as data access restrictions, data storage, security breaches, key facts statement (KFS), digital signatures and customer consent on digital lending platforms, which is creating barriers to the fintech companies operating in India. Likewise, these regulatory hurdles have been hampering innovation and investments in the fintech space worldwide and limiting the growth rate of the global market. In addition to the above, factors such as security concerns, cybersecurity risks, data privacy concerns and shortage of skilled personnel and slow adoption of fintech solutions in some of the emerging markets are showcasing unfavorable impacts on the market.

RECENT HAPPENINGS IN THE MARKET

• In May 2024, fintech companies in the Dubai International Financial Centre (DIFC) secured a total of USD 3.3 billion in venture funding. This huge funding is a strong signal for the growth of the market in the MEA region and fuels the innovation, entrepreneurship, and expansion opportunities for fintech startups operating within the DIFC.
• In May 2024, a fintech accelerator program called New Jersey Fintech Accelerator at Stevens Institute of Technology (NJ FAST) was launched by The New Jersey Economic Development Authority with an aim to boost innovation, entrepreneurship, and collaboration within the fintech sector by providing startups with access to mentorship, resources, and networking opportunities.
• In May 2024, Wipro and Microsoft formed a strategic alliance to transform the fintech industry through AI technology by leveraging the AI expertise of Wipro and the cloud computing capabilities of Microsoft to develop innovative solutions for fintech companies.
• In October 2023, Coinbase, a popular cryptocurrency exchange platform, secured an institution license from the Monetary Authority of Singapore. With the help of this license, Coinbase is expecting to become the major payment institution in Singapore by offering a wider range of financial services. With this move, the credibility and the market reach of Coinbase in Singapore are likely to improve.
• Commercial loan providers such as Kabbage, Lendio, Acción and Funding Circle (among others) provide established and easy businesses with quick and easy platforms for securing working capital. Oscar, an online start-up in the insurance sector, gained $ 165 million as an investment in March 2018.
• In March 2019, Cognizant announced that it would acquire the Dublin-based financial software company Meritsoft.
• In March 2019, WorldFirst acquired the Australian company CurrencyVue to develop its global trading platform.

REPORT COVERAGE

SEGMENTAL INSIGHTS

Based on technology, the API segment captured 36.2% of the worldwide market share in 2023.

APIs have become foundational in modernizing financial services by facilitating open banking, enabling faster innovation and improving customer experience. The growing usage of API to enable seamless integration and data exchange between financial institutions, third-party developers, and service providers is one of the key factors propelling the expansion of the API segment in the global market.

• For instance, more than 60% of financial institutions globally use APIs to enhance their digital capabilities.

The AI segment was the second biggest segment in the global market in 2023 and is expected to grow at a CAGR of 16.1% during the forecast period. The growth of the AI segment is majorly attributed to the capability of AI to analyze vast datasets, derive actionable insights, and automate complex decision-making processes. The transformative potential of AI in data analysis, risk management, fraud detection, and customer service automation and the quest for operational efficiency, enhanced decision-making, and superior customer engagement are boosting the growth rate of the AI segment in the global market. AI interfaces and chatbots have revolutionized customer service in recent years, and its augmenting business will allow the AI-oriented market to develop at a notable CAGR in the next five years.

The blockchain segment is another major segment and is eyeing to capture a notable share of the global market during the forecast period. Blockchain plays a crucial role in areas such as digital currencies and smart contracts to offer secure and transparent transactions. The ability of blockchain to provide decentralized and tamper-resistant ledgers that ensure trust in financial transactions is driving the growth of the blockchain segment in the global market.

Based on service, the payment segment dominated the market, holding 28.7% of the global market share in 2023.

The rapid adoption of digital payment methods and the growing volume of digital payment transactions are propelling the expansion of the payment segment in the global market. Factors such as e-commerce expansion and the rise of contactless payments are further boosting the growth rate of the payment segment.

• For instance, global digital payment transactions exceeded 700 billion in 2021 and are experiencing 20% Y-O-Y growth.

The fund transfer segment is the next promising segment and is projected to grow at a CAGR of 12.8% during the forecast period. The growth of the fund transfer segment is majorly driven by the growing number of international money transfers and remittances. The global nature of financial transactions fuels the dominance of fund transfer services, and fintech solutions in this space often offer faster, more cost-effective, and transparent alternatives to traditional banking methods.

The personal finance segment is set to hit the highest CAGR during the forecast period owing to the gaining prominence as consumers seek tools to manage their finances effectively. The dominance of the personal finance segment is driven by the growing demand for financial literacy, real-time insights into spending habits, and the desire for personalized financial advice.

Based on application, the banking segment led the market and accounted for 42.9% of the global market share in 2023.

Fintech innovations in banking, such as mobile banking apps, digital wallets and peer-to-peer lending platforms have been reshaping how the traditional banking system works. Factors such as convenience, accessibility and cost-effectiveness are majorly propelling the demand for fintech banking solutions among consumers and financial institutions and driving the segmental expansion.

• For instance, the usage of mobile banking apps increased by 25% globally in 2021 and has over 2 billion active users.

The insurance segment held a substantial share of the global market in 2023. The growth of the insurance market is primarily driven by innovations such as digital underwriting, personalized policies, and streamlined claims processing. Insurance leverages technology to enhance customer experiences, provide transparent offerings, and optimize risk management.

The securities segment is another lucrative segment and is likely to perform well during the forecast period. Securities applications play a third significant role in modernizing investment processes. The dominance of securities applications is attributed to their ability to democratize access to investment opportunities, automate portfolio management, and provide cost-effective solutions for investors seeking diversified and personalized investment strategies.

Based on the deployment of mode, the cloud segment dominated the fintech market in 2023.

The domination of the cloud segment is likely to continue during the forecast period owing to the scalability, flexibility, and cost-effectiveness of cloud solutions that seek to scale their operations rapidly. The ability to adapt to fluctuating workloads and the potential for cost savings contribute to the dominance of cloud deployment.

The on-premises segment did well in 2023. On-premises deployment, where the software and infrastructure are hosted locally within a company's data centers, has traditionally been the choice for some financial institutions due to security and control considerations. On-premises solutions offer a high level of customization and control but may face challenges in terms of scalability, upfront costs, and agility compared to cloud alternatives.

REGIONAL ANALYSIS

North America dominated the market in 2023.

The supremacy of North America worldwide can be seen continuing during the forecast period, with a tough fight coming from the Asia-Pacific region. The domination of the North American region is majorly credited to the increased adoption and development of prominent technologies in the fintech sector of North America. The growth of North America in the worldwide market is primarily attributed to the increasing support from the public and private sectors. Trends towards blockchain technology in developed countries like the U.S. and Canada are inclined to show a positive impact on the growth rate of the North American market. Blockchain technology is greatly adopted by banking, finance, and healthcare and is raising interest in fintech services.

The Asia Pacific region emerged as the fastest-growing regional market for fintech worldwide.

Opportunities abound in the changing landscape of fintech in the Asia-Pacific region, and investment is rushing to exploit them. Open banking and other regulatory policies are modifying financial services business, with external service providers ready to access customer information from formerly owned banks. China and India are experiencing much higher penetration rates for fintech services in this vicinity. The growth of the Asia-Pacific regional market is majorly driven by factors such as rapid digitization, burgeoning tech startups, supportive regulatory frameworks, high smartphone penetration, rising internet connectivity, an increasing number of initiatives from the governments of Asia-Pacific countries to promote financial inclusion and strong investor interest in fintech startups. India is one of the topmost countries in terms of using a high number of digital companies.

• According to a recent survey, around 89.5 million transactions were recorded in 2022 in India alone.

China is next in leading the dominant share of the market and is likely to grow at a CAGR of 8.34% during the forecast period. The increasing youth population is the primary factor that will help the market grow in this country. Rapid urbanization and a growing number of smartphones promote the demand for fintech services, especially in the banking sector. Fintech services will enhance the customer experience as they offer M2M communication that increases the efficiency in decision-making. Quick adoption of advanced technologies to ease the complex structured business processes in digitization is surging the growth rate of the Chinese market. Japan and South Korea are likely to show great opportunities for the market in the coming years, whereas the Singapore market has been growing faster in the past few years.

Europe is another key regional segment in the global market.

The increasing number of banking institutions and the launch of various digital payment methods in favor of customers are attributed to the growth rate of the European market. The European market has been experiencing significant investments from various venture capital, private equity, and corporate funding firms in the last few years, which has been contributing to the European market growth notably. The governments of European countries have been strongly supporting fintech innovation and have brought initiatives such as PSD2 and GDPR to promote open banking and data protection. The regional market players such as Revolut, TransferWise and N26 have shown significant growth and brought several changes to the banking and payment systems.

Latin America had a considerable share of the global market in 2023.

Latin America is continuing to witness robust growth opportunities in the foreseen period. The growing popularity of mobile-based payment methods promotes the growth of the Latin American market. The number of fintech companies in Latin America is growing steadily in the Latin American region, and countries such as Brazil and Mexico have been experiencing a steady increase in the usage of mobile payments. The governments of Latin American countries are also bringing favorable regulations to support innovation and entrepreneurship in the fintech sector across the region. For instance, in 2018, Mexico announced a fintech law to regulate crowdfunding, electronic payments and cryptocurrencies.

The MEA region is expected to increase its stake in the global market during the forecast period.

The market in the Middle East and Africa is gaining traction and is poised to expand further during the forecast period. Factors such as the growing penetration of mobiles and improvements in the banking infrastructure are promoting the growth of the MEA market.

LIST OF KEY PLAYERS IN THE MARKET

Companies that play a notable role in the global fintech market include

• Lufax
• Klarna
• Nubank
• SoFi
• Rapyd Financial Network Ltd.
• Kreditech
• Kabbage
• Circle Internet Financial Limited
• Mastercard
• Qufeng
• JD Finance
• Cisco Systems Inc.
• Plaid Inc.
• Funding Circle
• Google Payment Corp.
• International Business Machines Corporation (IBM)
• Neo Mena Technologies Ltd.
• Blockstream
• Robinhood Markets Inc.
• PayPal Holdings, Inc.
• N26
• Ant Group
• Revolut
• Square (Block Inc.)
• Adyen
• Bnkbl Ltd.
• Zhong An International
• Avant LLC
• Atom Bank plc
• Oscar Health
• Stripe, Inc.
• Oracle Corporation
• Finastra
• Kabbage
• SoFi Technologies Inc.
• Goldman Sachs
• Fiserv, Inc.
• TransferWise

DETAILED SEGMENTATION OF THE GLOBAL FINTECH MARKET INCLUDED IN THIS REPORT

By Technology

• API
• Artificial Intelligence (AI)
• Blockchain
• Distributed Computing

By Service

• Payment
• Fund Transfer
• Personal Finance
• Loans
• Insurance
• Wealth Management

By Application

• Banking
• Insurance
• Securities
• Others

By Deployment Mode

• Cloud
• On-Premises

By Region

• North America
• Europe
• South America
• Asia-Pacific
• Middle East and Africa