Over the last 5 years, the FinTech industry has thrived during a record-breaking boom of 97 percent increased revenue. According to a recent report published by Deloitte, in 2022, the industry was valued at $179 billion and is projected to grow another $33 billion by 2024.
Venture Capital Boom
Globally, over 13,000 FinTech startups were doing business as of 2020. Two years later, that number has more than doubled. There’s no doubt that financial tech investment and consumer adoption are on the rise. While consumers and businesses are trying to recover from the pandemic, restrictions and precautions still need to be taken to ensure the public’s safety.
As a result, Venture Capital funding in the FinTech industry has rocketed from an average of $23 billion to approximately $43 billion since 2018. Electronic payments, machine learning, insurance, personal loans, business ecosystems, and wealth management are all seeing increased global demand.
AI and The Internet of Things During the Pandemic
From the internet of things (IOT) to artificial intelligence (AI) to contactless transactions for a cup of coffee, the need for easy, transparent digital payments has catapulted society’s technological demands forward by decades, and the FinTech industry has stepped up to help. By enabling services ranging from contactless food delivery to online shopping at a wider selection of retailers, this industry has become a pivotal part of our everyday lives.
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Big Players Joining the FinTech Wave
According to CFTE, even industry giants like Visa and Mastercard have joined in, spending over $450 billion since 2020 lest they get left behind. Countless companies are working hard to become more instinctive in their business, from processing personal loans to collecting data and harnessing it to predict future market trends. Fintech is also reshaping the outdated and opaque banking and payment industry. Many institutions, like JP Morgan Chase, are partnering with FinTech companies to help them stay up to date on their ethical impacts, promotions, apps, user experience (UX), market trends, and tracking the ever-changing consumer habits to help businesses meet consumer demands like the digitization of these transactions, expedited with added layers of coded security which Blockchain technologies can facilitate. The regulation process for a simple bank-to-bank transaction that once took weeks, costing all parties time and money, can now take minutes thanks to new Blockchain technologies. It not only fosters a less bureaucratic process, but also reduces capital requirements and risk associated with human error and fraudulent risks. As a result, digital financial apps and services can be customized to meet demands, support communication between private and public chains, offer global scalability, and ultimately reduce costs.
The Value of Transparency
What makes finance technology like Blockchain so powerful is its transparency. Through mutualized standards, protocols, and shared processes, this FinTech development provides a single source of truth for all parties in a business network and enables honest collaboration, data management, and agreements. If implemented globally, funds administration would take a giant leap into the future. But as customers move toward a single network that is accessible to anyone with an internet connection, the need for quick and effective auditing of transactions exponentially rises.
Through trial and error, FinTech developers will continue to design top-tier auditing methods through the creation of new, blockchain-based applications with full transparency. No matter how large the transaction is, a defined audit of all transactions can be made readily available.
Over the last decade, FinTech companies have materially changed the basis of competition in financial services, but still work to disrupt the competitive landscape for a few reasons. Customers still show reluctance to switch from incumbent proprietary companies to startups that can feel underdeveloped and with costly service fees due to a lack of industry knowledge and funds. While there has been a struggle to reinvent the wheel, many new FinTech ecosystems are successfully fine-tuning the ones already in place within the finance industry.
Fintech | On the brink of further disruption – Deloitte. 12/2020
BCG FinTech Control Tower – 2021
State Of Fintech Q1’21 Report: Investment & Sector Trends To Watch – 05/2021
Ranking of Largest Fintech Companies in 2022