Is FinTech-as-a-Service a valuable asset for the future?
By Puja Sharma
The global FinTech-as-a-service market is estimated to garner a sizeable revenue by growing at a significant CAGR over the forecast period. The market’s expansion can be attributed to banks’ increasing investments in cutting-edge technology and innovations to enhance their products and client experiences, according to the report published by Research Nester on the ‘Market for the forecast period: 2022 – 2031”
For instance, investments in innovation were soaring, in 2019 in the pre-pandemic era; R&D grew at an exceptional rate of 9.0%. FinTech investments in 2019 capped around $214 billion, significantly slowing down to roughly $123 billion amidst the pandemic. However, in 2021 FinTech investments recouped over $211 billion and are expected to maintain the growth pattern. Optimistic developments in the sector are expected to further aid growth in the global FinTech-as-a-service platform market.
Also, expanding smartphone penetration for financial transactions and rising consumer desire for easy access to loan services and products are anticipated to propel market expansion in the ensuing years.
Rising Digital Investments
The increasing adoption of smartphones across the world and growing usage of its applications mainly related to finance such as mobile transactions are estimated to boost the market growth throughout the forecast period. As noticed earlier online transaction limit in India set by the Reserve Bank of India was $2528.06 per day but looking into the popularity and demand for online transactions, the limit has been revised to $6320.15 per day.
Open Banking data are being used by FinTech services apps to quickly collect the borrowers’ financial data, including their utility and bank statement data. As a result, both parties do receive more equitable approvals and interest rates from lenders to get a more accurate image of their creditworthiness, these benefits in turn are predicted to boost the market growth during the forecast period.
For instance, in the United States in 2019, around 91% of respondents said they used a banking app for checking account balance, and an approx. 80% said they also utilized it to view recent transactions and about 5% of people used it for customer service-related tasks. In addition to this, the global fintech-as-a-service platform market is predicted to accelerate over the ensuing years considering the growing investment in the development of smartphone applications and the availability of easy launch and access to these applications across the globe.
Moreover, government agencies from all around the world are continually encouraging businesses that offer digital financial services to improve their offerings. For instance, USAID introduced a new financial initiative called “Digital Invest” in April 2022 to use private financing for internet service providers (ISPs) and digital finance to reach historically marginalized consumer communities globally.
FinTech startups are increasingly attracting funding from venture capitalists. These investments are made to support reduced service costs, faster processing times, and automated banking systems. This increased funding for start-ups across the world is estimated to propel market growth during the forecast period.
Growing adoption of smart devices in the APAC and North America
The market in the Asia Pacific region is estimated to witness noteworthy growth over the forecast period owing to the region’s developing financial technology and the production of massive amounts of data.
Internet traffic in the Asia Pacific region has increased from about 25.0 Exabytes per month in 2016 to around 101.0 Exabytes per month in 2021 which is a little more than a 24% rise. In addition to this, the increasing investments by banking sectors in the development of mobile banking apps and the rising number of smartphone users in the region are predicted to propel the market growth during the forecast period.
Moreover, the market in the North American region is estimated to hold the largest market share over the forecast period owing to the growing adoption of smart technological devices mainly, smartphones, computers, and laptops, and increasing usage of the internet in the region.
Key Takeaways
- Payment segment to dominate the revenue graph
- Retail banking sub-segment remains prominent in the application segment
- North America region gains the largest portion of the revenue
- FinTech startups are increasingly attracting funding from venture capitalists
- In 2021 FinTech investments recouped over $211 billion and are expected to maintain the growth pattern.
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