- Financial services are changing due to disruptive technologies such as artificial intelligence and blockchain.
- Recognizing the advantages of using digital rails to manage their processes, incumbents are either launching their own digital services to directly compete against tech-savvy startups or acquiring them and partnering with them in order to take advantage of their capabilities.
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In recent years, we’ve seen a ballooning of activity in fintech — an expansive term applied to technology-driven disruptions in financial services, where Financial companies and startupsArtificial intelligence (AI), and other tech are used in their daily work processes.
Consumers are increasingly turning to digital alternatives for managing their finances. Both tech-savvy startups (FIs) and traditional financial institutions, (FIs), have begun to invest in the fintech sector. This digital shift is something investors should be aware of.
Fintech Market Statistics
Global Fintech Market is expected to grow at around 20% CAGR over the next four year. By 2025, the market value will reach $305 billion. GlobeNewswire.
Also, this year was a pivotal moment in the fintech sector. The once distinct distinction between fintechs (and financial services) has been blurred. Nearly all incumbent financial institutions are now looking inward, engaging in an innovation drive, fueled by the competition from fintechs in the wake of the coronavirus pandemic. As such, incumbents now actively invest in, acquire, and collaborate with fintech rivals.
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Fintech Company Landscape
As more consumers turn to digital methods of managing their finances they will be even more successful Banks that are digital onlyFintechs pose a threat to traditional banks. Some of the world’s top fintechs include:
Monzo
Number of employees: 251 to 500
Total funding: $356 million
Starling Bank
Number of employees: 501 to 1000
Total funding: $354 million
Robinhood
Number of employees: 501-1000
Total Funding: $1.2 Billion
Mint
Number of employees: 5001-10000
Total funding: $31.8 Million
Coinbase
Number of employees: 251-500
Total funding: $547.3 millions
SoFi
Number of employees: 1 – 5,000
Total Funding: $2.5 Billion
Fintech Industry Trends
Big TechCompanies will begin to invest in wealth management over the next several years. Amazon, Google and Microsoft have already begun to build the digital infrastructure needed by wealth managers. Nearly three-quarters (75%) of global high net wealth individuals said they would seek out wealth management services from large tech companies. According to Capgemini.
Robo-advisorFuture growth is expected to be in adoption — presenting an opportunity for fintechs and incumbents alike. Insider Intelligence estimated that North America’s robo-advisors only had $330 Billion in AUM at the close of 2019, but that this figure will grow to $830 Billion by 2024.
China’s fintech adoption is expected to increase, which will lead to more national regulatory initiatives around the globe.—improving the competitiveness of China’s already advanced fintech ecosystem. The coronavirus epidemic pushed financial services online to better reach customers. And this growing fintech use is likely pushing China’s regulators to investigate and better understand major fintechs’ activities.
