Financial Technology or Fintech companies and startups are ruling the roost in the new tech-enabled market. The pandemic forced people to stay indoors and order everything from staples to health kits from home. This led to an increasing dependence, acceptance, and demand for fintech apps among people.
The anecdotal wisdom is supported by the amazing and remarkable Fintech statistics that point in the same direction. In every region – the US, the UK, Europe, Asia-Pacific, Africa, the Middle East, and the Latin Americas – Fintech firms are the fastest-growing companies.
Technology, innovation, and ease of use with security have made these firms the new blue-eyed boys in the financial world.
Their growth is now pushing the established banking and financial services firms to invest in the technology.
If they do not catch up fast, they run the risk of becoming irrelevant very soon.
Let us demonstrate to you the burgeoning growth story of the Fintech industry with data, popular app statistics, and hard facts.
The Definitive Trends: Key Fintech Stats For 2021 – Editor’s Choice
- More than 75% of the conventional banking sector is fearful of new fintech platforms.
- In 2020 alone, at least one fintech app was used by 64% US adult population.
- VC Funding for Fintech startups was the highest among all categories at $128 billion.
- World over 77% of people now uses their mobile phones to make payments.
- Among Gen X, more than 90% are enthusiastic about mobile banking and fintech apps.
- The banking industry could save $27 billion annually by 2030 by adopting Blockchain to plug the leakages.
- More than 2/3 of financial services companies are using AI and Machine Learning to improve their services.
- In 2021, there are around 10,600 registered fintech startups in the US alone.
General Fintech Facts And Stats
- Before moving on to technology, region, and domain-specific fintech stats, let us understand how fintech is shaping the financial behavior of the masses.
- The fintech revolution was something waiting to happen.
- A confluence of many factors – technology, mobile connectivity, enabling regulations, blockchain, and AI tools – made it possible for innovators to bring the solutions to life.
- Today all global finance leaders regard fintech as the greatest great disruptor – since the abolition of the Gold standard. With each passing month, the statistics prove them right.
- The world has seen more financial inclusion and innovation in the last decade than it saw in the entire history of human civilization. Most of the progress in this direction is thanks to the fintech revolution.
- The fintech innovation is spanning multiple business models – B2B, B2C, B2G, G2C, and G2B. It is making the financial services firms and banks a predominantly technology setup.
- And tech companies are now leveraging their dominant position and consumer trust to offer financial services.
- The initial resistance, that was prevalent among masses and governments till 2018, has now given way to acceptance and rejoicing.
- The security concerns are still the main withholding factor – but regulations and security setup are gearing up for that too. Increased research in cyber security, encryption, use of blockchain development technology, and fraud detection using AI/ML add new arrows in the quiver of the banks and tech companies.
- Now, enough of our story, let’s turn the focus back to stats.
1. 3/4ths Of Conventional Banks Find Fintech Platforms Aggressive
- The fintech industry and startups have brought joys, savings, convenience, and mobility to the general public. But this has become a cause for heartburn among the conventional banking industry as they are forced to change the status quo.
- Most conventional banks are not up to the speed to offer the same level of services to the people. They find it unbelieving that why are people using the services of fintech firms at all.
- Even if some banks have started to realize the potential of investing in offering equivalent services, it has become increasingly difficult for them to keep up. An innovation every few weeks is not something their systems are geared to cope with.
- This anxiety is reflected in the surveys done among top bankers in every region of the world: close to 76% of bank executives are anxious that growth in fintech will eat into their market dominance.
- Close to 50% also showed “high levels of fear” from the fintech revolution led by Stripe, GPay, Apple Pay, and PayPal.
2. Half Of Fintechs Could Not Strike The Right Collaboration With Traditional Banks
When you can’t beat them, join them.
- One way out of the fintech quagmire for traditional banks is to collaborate with successful and proven fintech companies.
- More than 70% of fintech executives are interested in partnering with a conventional large bank or financial services firm.
- However, close to 50% of Fintech executives, who wished to collaborate with banks, said they were unable to find the right partner!
Some of the major reasons they cited in this regard are:
- Lack of agility in decision-making in the banking system.
- Most banks wanted to acquire them, rather than become partners.
- Lack of enabling regulations in the domain where fintech firms are working.
- Bankers still find fintech as a fad and a risky proposition.
3. Fintech Adoption In The US Is At A Staggering 64%
- Daily more US nationals are taking to fintech companies when they wish to find a novel solution to their financial problems.
- Many US citizens now use more than one fintech service to access their banks, investments, and make routine transactions. The adoption rate in the US at the end of 2020 was a staggering 64%, according to market research.
4. Global Fintech Industry Recorded $22.8 Billion Investments In 614 Deals In Q1 Of 2021
- The venture capital (VC) funding for fintech has gone through the roof in the last decade.
- Global giants and incumbents like Goldman Sachs, JP Morgan Chase, Barclays, and Banco Bilbao Vizcaya Argentaria are among the leading banks that have launched their fintech products & solutions.
- Investment banks like Softbank, KKR, and Sequoia Capital are injecting billions of dollars in B2C and B2B fintech companies. They are betting big on the millennials and the future.
- The combined investment in 2020 was upwards of $43 billion. While in 2021 more than half of it was invested in Q1 alone at $22.8 billion.
5. $10 Billion Funding For Top 7 Quickest-Growing Fintech Startups
- The growth in Fintech funding has kept pace with the growth in their services and technology. Of the top 500 startups by fastest growth, the top 7 alone cornered funding worth $10 billion.
- Among the most promising startups to receive funding were – LendingPoint received $1.7 billion funding, LANDBAY which received $1.6 billion, and Chime received $1.5 billion.
6. By 2023, The Global Fintech Market Is Poised To Cross $300 Billion
- The exponential growth was seen in fintech companies around the world – from New York, the USA to Accra, Ghana – has led to projections for an ever-expanding pie. Fintech firms are not only eating away at the market share of established banks, but they are creating new markets where there existed none.
- It is projected that by 2023, the fintech market size globally would easily cross the $300 billion mark and touch $305.7 billion. The projected CAGR in the decade from 2013 to 2023 is an astounding 22.17%.
7. Most Investors Are Wary Of The Digital Transformation Plans Of Banks
- Though banks are trying hard to bring about digital transformation by spending money on digital initiatives – like AI, ML, Blockchain, E-Wallets, Mobile payments, and many more – their investors aren’t optimistic about them.
- In a recent survey among institutional investors, who have high stakes in the financial services industry, only 25% were optimistic that such action plans would bear positive outcomes. Close to 7% of them thought such initiatives were needed, but only half of them showed confidence in the current management to face the challenge.
Deeper Industry Analysis Of Fintech App
1. More Than A Fourth Of Banking Services Are At Risk Of Disruption
- According to the research and market trends, up to 28% of services for banking and payment in the B2C space will be disrupted. This disruption will be the result of both adoption of new technology and the introduction of new business models by the fintech industry.
- If you consider the sectoral impact, then companies in the insurance and asset & wealth management will see a high rate of disruption of 22%.
2. Robotic Process Automation To Boost ROI Of banks By 100%
- Financial companies and banks that deploy RPA or Robotic Process Automation for many tasks in banking – like statement dispatch, check processing, transaction alerts, etc. – see that they can recover the costs incurred in less than 6 months.
- The ROI due to RPA is so phenomenal, that some bankers have reported a 100% return on investment within three months.
3. Blockchain Is Sweeping The Fintech World
- In repeated surveys, being conducted since 2015, an increasing number of participants are recognizing the importance of blockchain technology in the financial services sector. In fact, in a recent survey, close to 56% of participants were “well aware” of the importance of blockchain technology.
- The problem lies in the understanding and adoption of blockchain technology by conventional bankers. More participants, close to 57% of all participants, were unsure about how to adopt blockchain technologies in their existing business models and operational models.
Also Read: How Much Does It Cost To Make An App?
11. The Mobile Payments Market Size To Cross $6.6 Trillion By 2022
- With the near-universal availability of mobile devices, networks, and the Internet people are taking to e-wallet mobile payments in a big way. Among the most common mobile payments methods are micropayments using QR codes, P2P payments, NFC payments, direct bank debits, and mobile wallets.
- Mobile wallets and monetary services have brought the unbanked masses into the ambit of formal banking and formal transaction umbrella. Citizens in underdeveloped and developing markets are fueling the growth in the number of mobile transactions exponentially.
- Even in a developed and largely banked economy like the US, the share of nationals taking to digital banking between 2018 and 2022 would increase from 61% to 65.3%.
- The overall mobile payment segment of the fintech industry would take the lion’s share with an estimated market share of over $6,685,102 million ($6.68 trillion) at the end of 2021.
- Within the mobile payments space, the QR code transactions alone would garner $2,216,200 million or more than $2.2 trillion. The largest contributor to this would be China at $2.09 trillion worth of transactions.
12. Fintech Insurance Market To Cross $15 Billion By 2023
- With insurance comes the financial security if one were to fall sick or pass away. Among the most important aspect of the fintech revolution, besides micropayments, is the adoption of fintech insurance for life, health, and other purposes.
- People who could not produce their income proofs for being part of the informal economy can now simply share their transaction history to show a steady cash flow and avail of insurance.
- It is estimated as awareness after the COVID-19 pandemic increases, fintech insurance would show the most growth potential in coming years. By 2025 the annual premiums collected through fintech startups could surpass the $15 billion mark at $15.343.3 billion.
- We can go on and on about the impact of the fintech industry in the lives of commoners, high net worth individuals, local stores, large businesses, government services, and the banking industry.
- The realms of statistics from the past and the current trends paint a picture of stunning growth, increased market size, global reach, and the dominant market position of fintech adopters and innovators.
- All the above data points and statistics point toward a steep and almost breathtaking rise in the fintech industry.
- The large and conventional incumbent players in the banking and financial industry try to figure out their strategy to remain one-up on Mint Street.
- They are collaborating, acquiring, and creating dedicated teams within their frameworks to make the most of this opportunity. Because if they do not pull their act together today’s opportunity would become tomorrow’s threat.
- The future innovators in the fintech space are full of surprises, exciting, and positive. If the current trends continue, then we may witness the fintech players become the de-facto financial services providers in our lifetime.