Fintech-as-a-Service Platform Market Growth Analysis 2022-2030
Fintech-as-a-Service Platform Market Growth
Fintech-as-a-Service Platform Market Growth
The size of the market for fintech as a service market growth was estimated to be 232.14 billion US dollars in 2021, and it is predicted that it would rise at a compound annual growth rate (CAGR) of 17.2 percent from 2022 to 2030.
Fintech is the technology-driven financial sector. It automates financial transaction processes to improve customer experience and end-user operations. Fintech is used more than we realise and has changed financial transactions. Fintech-as-a-service provides financial technology as a service to quickly and efficiently solve customer problems. Akurateco, a white-label payment gateway, offers a “Cashier platform” that lets merchants access multiple payment solutions with one integration.
Fintech-as-a-service has many benefits. These platforms are free. Since it’s a service platform, users don’t have to pay. Vendors must ensure smooth processing. The services reduce processing costs by at least 50% because users can route transactions through multiple PSPs and choose the lowest rates. Many fintech-as-a-service platforms offer excellent protection against fraud and chargeback. This is one of the main features of these services that attracts consumers and results in a larger user database so quickly.
Blockchain technology, open banking, cloud & big data analytics, voice bots, and digital payments will drive industry expansion. Banks and financial institutions are implementing technology advances. Technological advances allow virtual investing, borrowing, transferring, and saving. Thus, fintech improvements should fuel the fintech-as-a-service platform market.
Fintech startups seek to improve old ways, so VCs finance them more. These investments help organisations cut service costs, increase processing time, accelerate blockchain adoption, and automate banking operations. Fintech platforms as a service often apply these benefits, generating demand.
Multiple global governments encourage digital financial service providers to improve. USAID established ‘Digital Invest’ in April 2022 to use private financing for ISPs and digital finance servicing traditionally excluded consumer populations worldwide. As a result, the market will have tremendous growth prospects.
Consumers worry about security and privacy as financial services become more digital. Improved UI and data security and privacy among users are expected to boost the industry. Elderly users’ incapacity to adapt to changing technology may potentially slow industry growth.
Fintech-as-a-Service Platform Market Segment Analysis
- Fund Transfer
In 2021, payments accounted for 40.10% of worldwide revenue. The increased integration of AI and API into mobile-based payment services for traditional banking is expected to drive segment growth. Innovative attempts by tech companies to improve their goods augur well for the segment’s growth. In November 2021, Google released voice-to-text functionality, allowing users to utilise voice commands to add account information and initiate payments.
Fund transfer is expected to expand in the forecast period. Fund transfer involves sending and receiving money via technology-based mechanisms. The increased popularity of fund transfer apps will drive demand and segment growth. Various financial organisations globally are developing fund transfer apps with sophisticated user interfaces for improved customer experience. These things boost the segment.
- Artificial Intelligence
More than 28.16 percent of worldwide revenue is expected to be generated by the blockchain industry by 2021. Large corporations are leading the way in adopting blockchain technology. Due to its increased transparency and automation benefits, blockchain is being considered by a number of large organisations. Because of its improved security and efficiency, financial institutions are turning to blockchain technology. For both financial institutions and end-users, blockchain technology provides an additional layer of protection by allowing users to be sole proprietors of their capital. Because of the advantages that blockchain provides, the market is likely to rise rapidly.
During the projected period, the artificial intelligence category is expected to develop at the fastest rate. The segment’s expansion is being fueled by an increasing number of businesses implementing AI to improve decision-making, query resolution, processing time, and overall efficiency. Furthermore, AI encourages business innovation, resulting in more tailored, faster, and safer services that benefit customers around the world. This market’s expansion will be fueled by companies’ efforts to improve their competitiveness and gain a foothold in the marketplace.
The Application Insights
- KYC Verification
- Fraud Monitoring
- Compliance & Regulatory Support
More than 31.89% of global revenue was generated by the compliance and regulatory support market in 2021. Many financial institutions across the world are implementing in-app customer care as a means of streamlining their business processes while also improving the overall client experience. These businesses are also being compelled to improve customer service due to an increase in global fraud and money laundering. The segment’s growth will be boosted as a result over the next few years.
At a CAGR of 17.7 percent, the market for KYC verification is expected to increase during the forecast period. One of the primary elements projected to drive the segment’s growth is the rise in unlawful activities and scams. KYC is a critical regulatory component that verifies the veracity of users by validating the personal information they submit. As a result of KYC, a company is able to better assess its customers’ financial conditions and keep tabs on any suspicious activity.
Insights for the End User
- Financial Lending Companies
As of 2021, 30.04 percent of the global revenue was generated by the insurance business. For insurance firms, reliable risk assessment and claim processing are made possible through the usage of fintech platforms as a service. Insurance companies are also collaborating with fintech firms to save processing costs and time spent by customers. It is expected that the insurance industry’s increased demand for fintech-as-a-service platforms will drive the market throughout this time period.
Financial lending companies are projected to grow at a 17.0% CAGR. The segment is growing as consumers choose to use financial products from home. Tech-enabled platforms assist financial institutions offer lending, borrowing, and fixed deposits. Rising digital lending platforms promise favourably for market expansion.
Growth drivers for fintech-as-a-service platforms Market
Increasing bank spending on customer experience will boost market growth.
The global fintech-as-a-service platform market is predicted to develop due to rising investments in banking & finance to improve customer experience. In today’s digital age, practically all sectors have undergone intense technical developments to ease operations and improve commercial productivity. Banks and other financial institutions have existed for decades, but their technology revolution is recent due to client demand for user-friendly service. Consumer affinity for digital technologies should boost worldwide market growth. More financial service providers are embracing strategic methods to meeting client demands, resulting in a growth in cooperation between banks and IT service providers. This is linked with the necessity to deliver outstanding financial services to remote areas left untouched until recently.
The Indian banking sector spent over USD 11 billion on technology in 2020, up 9.1% from 2019. A favourable approach and expanding fintech-as-a-service platform providers are expected to fuel global industry growth.
Market Opportunities in Fintech-as-a-Service platform market
FaaS suppliers creating tailored services to drive growth.
Due to digitalisation, customer needs have changed. Changes in consumer needs have prompted fintech-as-a-service firms to offer customised solutions. This trend is likely to give substantial and attractive growth prospects in the global market as consumer needs evolve, spurred by financial institutions’ continual innovations to stay ahead in the competition.
Cross-border payments may boost FaaS usage. More than 40% of large organisations employ fintech-as-a-service platforms for real-time payments, indicating increased adoption.
Fintech-as-a-Service Platform Market Challenges
Data privacy and security issues
Fintech and FaaS platforms are vulnerable to security breaches since they deal with money and user data. Traditional banks were more physical, so data privacy wasn’t a concern. However, with all data being transferred online, the security risk is increased. Fintech-as-a-service must use top-notch security to protect customer data. If platforms can’t do so, a data breach may cause significant clients to lose trust in them.
Multiple powerful companies make the market competitive. These companies invest heavily in R&D to improve their products. They’re looking for ways to improve, including strategic alliances. Rapyd Financial Network Ltd., a U.K.-based fintech startup, agreed with Arion Bank in Iceland to buy Valitor in July 2021. This transaction will expand Rapyd Financial Network Ltd.’s payment capabilities and issuing portfolio throughout Europe. Finance-as-a-service market leaders include:
- PayPal Holdings, Inc.
- Block, Inc.
- Mastercard Incorporated
- Envestnet, Inc.
- Upstart Holdings, Inc.
- Rapyd Financial Network Ltd.
- Solid Financial Technologies, Inc.
- Railsbank Technology Ltd.
- Synctera Inc.