The dynamic FinTech landscape is undergoing rapid expansion and transformation, marked by an influx of novel enterprises and innovations. At BairesDev, we’ve had the privileged vantage point of firsthand immersion in this surge, actively engaging in over 85 projects within the last five years. Our involvement spans digitalizing financial operations to catalyzing solutions for startups and established firms.
We’ve curated our insights into a white paper that draws from our FinTech portfolio while also tapping into external research. Within its pages, we dissect emerging industry trends and spotlight the technologies that dominate the discourse and will continue to captivate the industry’s focus. Furthermore, we explore how the partnership between the FinTech world and software development outsourcing is set to reshape the industry as we move toward 2024.
Key Takeaways
Expect to gain valuable insights that will reshape your understanding of the FinTech landscape:
- Positive market forecasts: The global FinTech market size is expected to grow 530% by 2030. In 2023 alone, its valuation stands at $179 billion. It is the rising customer expectations that will fuel a global market surge.
- Championing inclusivity: Embedded finance and open banking are key to the future of global financial inclusion. Embedded finance is predicted to grow 421% by 2027.
- AI’s added value: Financial institutions globally note AI’s potential to deliver up to $1 trillion of yearly added value while saving North American banks $70 billion by 2025.
- Rising FinTech subdivision: RegTech and InsurTech are disruptive FinTech sub-divisions. These solutions leverage ML and AI’s impact on emerging markets and will reach a combined valuation of $26 billion by 2025.
- Web3 ascension: Adoption of Web3 will continue to scale. By 2024, 25% of enterprises will use centralized services wrapped around decentralized Web3 applications. FinTech companies will have to promote Web3 literacy among customers.
- Predictive technology: Our FinTech clients are looking to differentiate their companies. By leveraging AI and ML, they’re propelling predictive technology into the forefront—an evolutionary stride beyond conventional data reporting.
What Does the Future Look Like?
The FinTech industry’s future looks promising despite a rough 2022, after 20 uninterrupted years of growth. Global FinTech funding amounted to $75.2 billion in 2022, down 46% compared with 2021 but up 52% compared to 2020. The second half of the year was bleak. In the fourth quarter, only $10.7 billion of investment dollars went to fund FinTech startups. About $3.2 billion, or nearly 30%, flowed into U.S.-based companies. Meanwhile, global venture funding reached $415.1 billion in 2022, marking a 35% drop from a record 2021.
There are many reasons why the drop happened. There was an overall drop in investment activity given the macroeconomic environment and recovery from the COVID-19 pandemic, which resulted in higher inflation and the Federal Reserve raising interest rates.
The good news is that in 2023, the FinTech market will be valued at $179 billion and is expected to grow at a CAGR of 23.58% during the forecast period, according to a January 2023 report.
The industry will continue growing from there. According to a Grand View Research report, the global FinTech market size is expected to reach $949.49 billion by 2030, growing at a CAGR of 17.2% from 2022 to 2030.
At the heart of this expansion lies investments from banks and corporations in technology-driven solutions. The future of financial services rests on technology-infused infrastructure and APIs, propelling the global FinTech market’s expansion.
Emerging technological advancements have allowed financial technology companies to offer low-cost personalized products that meet customers’ rising expectations, further driving the market growth worldwide.
These are some of the most interesting developments reshaping the industry:
- Distributed Ledger Technology (DLT) continues to evolve. Despite the challenges faced by the crypto market in 2022, this year holds the promise of enhanced legal clarity, charting a path for DLT’s progression.
- Sustainable digital finance. FinTech might prove to be indispensable for banking’s ESG journey, considering its impact on financial inclusion.
- Digital wallets. A growing number of mobile wallets will be funded directly from bank accounts instead of cards.
- Blockchain expands beyond crypto. The scope of blockchain technology expands beyond the crypto realm, influencing a broader range of processes within the FinTech sphere.
- Digital Identity. The widespread use of digital identities will enhance security, reduce fraud, and improve customer experience.
These developments underscore the FinTech industry’s exhilarating transformation.
Explore our latest whitepaper, “8 FinTech Trends: From Open Banking to Web3,” for a comprehensive dive into the unfolding future of financial technology.
If you enjoyed this, be sure to check out our other AI articles.
