As consumers increasingly turn to digital methods for managing their finances, the fintech industry has been registering significant growth in recent years. The growth of e-commerce, rising smartphone penetration, and the emergence of digital payment options are contributing to the rising fintech market value. In 2020, the global fintech market was valued at USD7301.78 billion, owing to the increasing application of mobile devices and technology-based solutions and rising investments in blockchain and big data. Growing demand for mobile banking applications that allow customers to transact online and transfer money to other users and huge investments by incumbents spurred by competition are supporting the global fintech market growth.
According to some findings, the fintech industry is expected to boost economic growth by 2.2%. Higher digital financial inclusion in payments means increased fintech consumer financing and more financial freedom. In advanced economies, the digital mode of transactions is emerging as the preferred option compared to emerging economies that primarily use cash. However, increasing penetration of smartphones, rapid urbanization, and wide internet connectivity in emerging economies are also boosting the fintech market growth. Additionally, financial institutions collaborate with FinTech firms to enhance customer services and improve operations as merchants increasingly opt for cashless payment methods.
APIs to Dominate the Global Fintech Industry
Based on technology, the global fintech market is segmented into API, AI, Blockchain, Distributed Computing, and others. In 2021, Application Programming Interface (API) segment accounted for 37.73% of the market share and is expected to dominate the global fintech industry by 2027. The emergence of new applications, services, and business models that allow data access among parties involved in financial transactions, including banks, third-party providers, websites, and consumers, is contributing to the segment growth. In addition, the shift towards open banking and a new generation of innovative and dynamic companies powered by fintech are supporting the dominance of APIs in fintech.
Rising Collaborations in the Fintech Industry
The rise of digital ecosystems, regulatory changes, and increasing customer adoption have led to an increasing number of collaborations. Fintech companies are forming strategic alliances with banks to ascertain the credibility of their platform, bigger investment budgets, legal and regulatory compliance, and risk management. Banks are collaborating with fintech companies to cater to customers increasingly getting used to the seamless digital experience. As FinTech companies are moving from just being a single service provider to providing a whole suite of services, the need for collaborations is projected to further increase, which is anticipated to contribute to the global fintech market growth.
Asia-Pacific to Account for Highest Market Share
In 2021, Asia-Pacific accounted for 50.69% of the global fintech market, owing to the rising tech-savvy population, the emergence of digital platforms, and increasing investments in the blockchain industry. Besides, effective regulations by the government and the introduction of digital currencies are adding to the increasing adoption of FinTech platforms in the region. Besides, setting up virtual banks, increased adoption of digital payments, and skyrocketing e-wallet transactions are expected to spur the growth of the fintech market growth.
According to TechSci Research report on “Global FinTech Market By Technology (API, AI, Blockchain, Distributed Computing, Others), By Service (Payment, Fund Transfer, Personal Finance, Loans, Insurance, Others), By Application (Banking, Insurance, Securities & Others), By Region, Competition Forecast & Opportunities, 2027”, the global FinTech market is anticipated to register a significant growth of nearly 27% during the forecast period. The market growth can be attributed to the rising popularity of digital payments and rising investments in technology-based solutions.