The Fintech industry describes the new technologies that seek to automate and improve the delivery of corporate financial services. At its center is the need to help consumers, business owners, and corporations manage their financial operations with greater efficiencies. Specialized software products, algorithms, and other processes work to create faster, more accurate outcomes that are accessible on computers and smartphones.
Fintech options began to emerge around the start of the 21st century. The industry originally focused on the back-end systems that were present in the established financial institutions of the time. Over the next decade, there would be a shift to create more consumer-orientated services, which has led to definitions that help education, fundraising, retail banking, investment, and nonprofit sectors – just to name a few.
The Fintech industry is also responsible for the development, implementation, and use of cryptocurrencies. Although there has been an impressive amount of attention when looking at the idea of a cross-border monetary unit, the global banking industry still offers trillions of dollars in market capitalization.
Important Fintech Industry Statistics
#1. Insurance technologies were the primary destination for investor dollars in 2018, with over $1.8 billion in capital flowing to the sector. There were two primary areas of interest here: full-stack companies and digital agencies. (S&P Global)
#2. About 27% of private automotive premiums written in 2017 came through direct response channels, including online sales, that were developed in part through partnerships with the fintech industry. (S&P Global)
#3. The payments sector was the only one that outperformed insurance technologies for U.S. fintech investments, reaching $1.9 billion on fewer overall transactions. Investment and capital markets technologies, as well as digital lending, both saw more than $1.2 billion in investments in 2017 as well. (S&P Global)
#4. The total value of fintech investments around the world in 2017 was valued at more than $34.4 billion. VC-based investments totaled $13 billion over this period, while the value of investments in the United States reached $2.4 billion. (Statista)
#5. The total value of global peer-to-peer lending in 2017 reached $9 billion. That’s about half of the $19.9 billion that banks were believed to have spent on new fintech technologies in North America for the year. (Statista)
#6. 63% of Americans are not familiar with fintech options that might apply to their financial welfare. Only 15% of U.S. citizens say that they use a personal financial tool or app to maintain their budget. (Statista)
#7. 32% of Americans say that they are unfamiliar with the concept of virtual currencies, including cryptocurrency. (Statista)
#8. Only 1 out of every 10 Americans are using ser vices to manage their stock portfolios through the use of a smartphone app or another service over the Internet. (Statista)
#9. There are about 200,000 employees currently working in the fintech sector in the United States. 43% of banks in the country have started programs to incubate new companies for the industry, which has encouraged more research and development, better wages, and a wider variety of useful products. (Statista)
#10. When consumers were given a list of mobile banking features that would be important to them if they were to choose a bank, 61% said that they would like to have instant money transfers. Fingerprint logins came in second, at 38%. The ability to order a replacement card (37%), using Apple Pay (32%), and being able to turn a specific card on or off (31%) were also popular features. (Business Insider)
#11. By the third quarter of 2018, the overall funding for the U.S. fintech industry was up 82% from the total figures from 2017. That’s a total value of $32.6 billion. (CB Insights)
#12. The assets of retail-focused digital wealth managers is expected to top more than $600 billion by 2022. That would be six times more than what was available in assets in 2010. (S&P Global)
#13. The large incumbent institutions in the fintech industry, which include Charles Schwab and Vanguard, are responsible for about 70% of the estimated retail-focused wealth growth each year. The move to low-fee or no-fee models is a common theme in companies who wish to grow a customer base, with targeted cuts to ETF and equity commissions. (S&P Global)
#14. Digital lending in the United States grew by over 30% in 2017, reaching a total value of $41.1 billion. Between Q4 2015 and Q4 2017, there was a 16.4% increase from peak-to-peak. One of the strongest originations for the industry is from student-focused lenders, such as SoFi. (S&P Global)
#15. Working capital needs are the primary reason why small businesses are seeking loans today. 62.3% of companies needed help with supplies, materials, inventory, or meeting their payroll obligations. 18% used loads to manage unforeseen expenses, another 18% said the funds were for infrastructure upgrades, while 16.4% of SMBs said that they used working capital to refinance or pay down their existing obligations. (S&P Global)
#16. The Zelle Network reported payment volumes of about $160 billion in aggregate since Q1 2017, which is significantly higher than the $77.8 billion reported by Venmo. (S&P Global)
#17. 49% of consumers say that they avoid using payment apps because they find that it is easier for them to use checks, cash, or a credit/debit card for a transaction. 45% say that they have security concerns with this technology. Just 14% say that they don’t know if mobile payments are accepted where they like to shop. (S&P Global)
#18. 4% of consumers are using a smartphone that doesn’t support the mobile payment features that they would want to use. (S&P Global)
#19. 40.9% of customers say that they visit their mobile bank app a few times per week to manage their primary checking account. About 21% say that they visit it daily, while 13.7% will use it more than once per day. (S&P Global)
#20. 84% of consumers ay that the ability to check their balance is the most important feature of their mobile bank app. About 69% said that the option to review transactions was an essential feature as well. 61.7% wanted to transfer money between accounts, 54% enjoy having access to their account statements, and 53% said that pay bills was a critical option for them. (S&P Global)
#21. 49% of consumers have used a mobile payment app to pay for something at a retail store. About 44% said that they paid one of their bills through a bank or a third-party app. About 43% said that they used fintech technologies to send money or receive it from someone else, but only 6% used one to send or receive a cryptocurrency payment. (S&P Global)
#22. There were only 11 VC-backed fintechs launched in 2018 versus the 178 that were started in 2017. Despite the severe decline in startup activity, there was over $60 billion in investments, and VC funding accounted for two-thirds of it. (Deloitte)
#23. China saw the highest levels of fintech investment in 2018, totaling $23 billion to surpass the United States in this area for the first time. One transaction, the mega-round in Q2 2018 from Ant Financial, accounted for about 60% of this figure. (Deloitte)
#24. Mergers and acquisitions activities for the fintech industry in 2018 was down 10% from the year before. IPO volume was also down, with just one IPO from Adyen representing 30% of the final total. It raises $1.1 billion in proceeds. (Deloitte)
#25. The average deal size in the fintech industry, especially in Asia, is almost twice as large as the global average because of the presence of mega deals. Zhong An is an example of this fact, with its $11 billion IPO valuation. (McKinsey)
#26. 82% of fintech industry incumbents are expected to increase the number of partnerships that they form in the next 3-5 years. That’s because the expected annual ROI on industry-related projects is 20%. (PwC)
#27. 77% of industry agencies expect to adopt blockchain technologies as part of their in-production system or processes by December 2020. (PwC)
#28. 88% of the incumbents in this industry say that they are increasingly concerned that they are losing revenues to the innovators and fintech disruptors, which leads 77% of them to increase their internal efforts to innovate over the next year. (PwC)
#29. 30% of the largest financial institutions that participate in the fintech industry say that they are investing in Artificial Intelligence platforms as a way to become competitive once again. (PwC)
#30. 54% of the industry incumbents say that data privacy, protection, and storage is their primary regulatory barrier that prevents them from being as innovative as they could be. (PwC)
#31. 84% of companies say that they believe their customers are already using fintech companies to conduct payments. 68% say that consumers are performing fund transfers with this technology, and 60% think that the personal finance needs of their client are met by the industry. Only 38% say that wealth management is a top priority. (PwC)
#32. Although 30% of consumers say that their plans are to increase their usage of non-traditional financial services providers, 39% plan to keep using the traditional providers of which they are already familiar. (PwC)
#33. 74% of companies say that their most relevant technology investment from the fintech industry will involve data analytics. 51% said mobile tech is a top priority, while 34% are looking at AI. Only 14% are looking at public cloud infrastructure. (PwC)
#34. 48% of consumers say that they do not use cryptocurrency to complete a payment because they have security concerns with the technology. 45% said that they were unsure of how to use the payment option or that it was too complicated. 26% stated that they avoided this option because the prices are too volatile. (S&P Global)
#35. 18% of consumers said that they had never heard of a cryptocurrency when they were asked in 2018 if they were willing to start using one. (S&P Global)
#36. Only 4% of consumers around the world said that they were “extremely familiar” with blockchain, while 20% said that they were “very familiar” with it. North America leads these categories at 7% and 34% respectively. More people in Latin America (6%) than Europe (4%) said that they were extremely familiar with it. (PwC)
#37. 77% of businesses say that they plan to adopt blockchain production systems or processes by December 2020, making it a rapidly developing element of modern corporate practices. (PwC)
#38. Companies in Asia say that their expected return on fintech-related projects is 25%, whereas the ROI expected in Europe is just 14% – which is four percentage points lower than what Africa expects to achieve. (PwC)
#39. 80% of fintech companies say that they have trouble hiring or retaining workers who have the necessary skill set that can help them to become more innovative. (PwC)
#40. With the exception of the Oceania region, the opportunities related to the rise of fintech in each specific industry are most popular with an expanded set of products and services. Firms in Australia report that it is an ability to reduce cost headcounts that help this industry to rise. (PwC)
#41. 60% of businesses around the world say that their number one opportunity in this industry is to offer something new to their customers. (PwC)
Fintech Industry Trends and Analysis
The record surge of investments that the fintech industry experienced in 2018 will continue in 2019 and beyond. Although the figures may not double the total revenues involved for each segment, there will still be impressive growth because new regions, like Africa and South America, are just now getting into the scene. There is considerable scaling going on in the older segments of this ecosystem, including alternative lenders, while many are looking to get into new markets as the competition levels increase.
Several areas are gaining traction, including distributed ledger technology and blockchain. Look for digital identity to continue seeing a surge in popularity as well.
The one point of uncertainty for the fintech industry is the fact that a majority of the incumbents in this sector are going through business transformations. Their goal is to reimagine all of their products or services, including the traditional systems on the front end or the back-end processes. Look for investments to continue building for the brands that offer evidence of success, while everyone else goes through a mad scramble to find the next innovative idea.
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