Fintech Market

GLOBAL FINTECH MARKET SIZE

The size of the global fintech market 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.

Current Scenario of the Global Fintech Market

Fintech is a combination of technology and financial services that have transformed the way businesses operate. In the last few years, the financial technology sector has emerged considerably, resulting in the modification of businesses to a customer-centric approach. Therefore, find room in a large number of companies ranging from start-ups to technology companies and established companies around the world. With a collaborative or demanding approach, financial services companies and technology companies have taken reciprocal paths and progressed with innovative and disruptive techniques in a continually changing business scenario. Fintech or financial technology is a novel advancement that is gaining prominence across the globe by replacing traditional financial services in various sectors such as payments, electronic commerce, banking, social commerce, wealth management and others.

• As e-commerce is spreading rapidly around the world, it succeeds in the key application segment of the FinTech market, which will grow with a superlative annual growth rate of 5.18% until 2029.

With a large number of mobile users who have a penchant for online transactions, coupled with the fact that the implementation of FinTech significantly improves the customer experience by providing convenience in payments and delivery in e-commerce, the global Fintech market demand will experience incredible growth in the future Infrastructure-based technology in the open platforms and application programming interfaces is modifying the future of the financial services industry, while the operational advancements offered by the automation of robotic processes (RPA), chatbots and distributed accounting technology (DLT) allow greater agility, efficiency and precision.

MARKET DRIVERS

Information on the adaptation trends of fintech in small and medium-sized enterprises (SMEs) propels 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.

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 instills 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.

The Growing Demand For Mobile Banking Applications Boosts the Fintech Market Growth.

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. This creates a significant FinTech market for providers to capitalize on demand from various banks, old and new.

MARKET RESTRAINTS

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

Unfortunately, the growth of the FinTech market 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 fintech market.

RECENT HAPPENINGS IN THE FINTECH 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 fintech 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 in Singapore. 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

MARKET SEGMENTATION

This global report on the fintech market is segmented and sub-segmented into the following categories.

Global Fintech Market - By Technology

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

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 fintech 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.

Global Fintech Market - By Service

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

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.

Global Fintech Market - By Application

• Banking
• Insurance
• Securities
• Others

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 fintech 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.

Global Fintech Market - By Deployment Mode

• Cloud
• On-Premises

The cloud segment accounted for a significant portion of the global market in 2023 due to the scalability, flexibility, and cost-effectiveness of cloud solutions that seek to rapidly scale their operations. 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.

Global Fintech Market - By Region

Based on region, the global market is segregated into

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

Among them, North America was the leading revenue contributor to the global market in 2023. The domination of the North American region is majorly credited to increased adoption and development of prominent technologies in the fintech sector in the region. 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 fintech market in North America. 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 fintech 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 levels up 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 fintech market. Japan and South Korea are likely to show great opportunities for the fintech market in the coming years, whereas the Singapore fintech market has been growing faster in the past few years.

Europe is another key regional segment in the global fintech 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 fintech market has been experiencing significant investments from various venture capital, private equity and corporate funding firms from the last few overs, 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 and will have robust growth opportunities in the foreseen period. The growing popularity of mobile-based payment methods promotes the growth of the fintech market in Latin America. 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 fintech market in MEA is gaining traction and 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 fintech market.

KEY PLAYERS IN THE GLOBAL FINTECH MARKET

ZhongAn, Oscar, Qufeng, Avant, Lufax, Atom Bank, Kreditech, Kabbage, JD Finance, SoFi, Nubank, Klarna, Square and Funding Circle are some of the other market players looking for market share in FinTech.