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- Disruptive technologies such as artificial intelligence, blockchain, and alternative lending are transforming financial services.
- Incumbents recognize the benefits of running their processes on digital rails and, as a result, most are either rolling out digital services of their own to directly compete with tech-savvy startups, or acquiring and partnering with them to leverage their capabilities.
- Do you work in the Financial Services industry? Get business insights on the latest tech innovations, market trends, and your competitors with data-driven research.
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 startups use artificial intelligence (AI) and other tech in their day-to-day processes.
As consumers increasingly turn to alternative, digital methods of managing their finances, tech-savvy startups and traditional financial institutions (FIs) alike are diving into the fintech industry. And investors would be wise to take note of this digital shift.
Fintech Market Stats
The Global Fintech Market is anticipated to grow at a CAGR of around 20% over the next four years. The market value is expected to reach around $305 billion by 2025, according to GlobeNewswire.
Additionally, this year marked a watershed moment for the fintech sector, with the once clear distinction between fintechs and financial services proper now blurred significantly. Virtually every incumbent financial institution is now looking inward and engaging in an innovation drive, spurred on by competition from fintechs amid the coronavirus pandemic. As such, incumbents are now actively investing in, acquiring, and collaborating with their fintech rivals.
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Fintech Company Landscape
As consumers increasingly turn to digital forms of managing their finances, digital only banks and fintechs have posed a threat to traditional banking institutions. 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 1,000
Total Funding: $354 Million
Robinhood
Number of Employees: 501 to 1,000
Total Funding: $1.2 Billion
Mint
Number of Employees: 5,001 to 10,000
Total Funding: $31.8 Million
Coinbase
Number of Employees: 251 to 500
Total Funding: $547.3 million
SoFi
Number of Employees: 1,001 to 5,000
Total Funding: $2.5 billion
Fintech Industry Trends
Big Tech companies will dive into wealth management in the coming years. Amazon, Google, and Microsoft, are already building the digital infrastructure required by wealth managers, and almost three-quarters of global high net worth individuals say they would adopt wealth management services from big tech firms, according to Capgemini.
Robo-advisor adoption is set to grow in the future — presenting an opportunity for fintechs and incumbents alike. Insider Intelligence estimates that robo-advisors in North America only had $330 billion in AUM at the end of 2019, but we expect this number to grow to $830 billion by 2024.
Rising fintech adoption will spur further national regulatory initiatives in China and across the globe—improving the competitiveness of China’s already advanced fintech ecosystem. The coronavirus pandemic pushed financial services online to better reach consumers. And this growing fintech use is likely pushing China’s regulators to investigate and better understand major fintechs’ activities.
