Even though there’s been a drop in fintech investments from $238.9 billion to $164.1 billion, the fintech world keeps evolving and coming up with new trends. The big players in the industry are checking out startups, investing in them, and adopting the best ideas.
They’re diving into innovative tech, from artificial intelligence to putting financial tools in new places.
Artificial Intelligence and Machine Learning
These days, fintech giants are all about using artificial intelligence (AI) and machine learning to automate tasks and make smarter decisions based on lots of data.
In 2021, McKinsey found that 56% of companies were using AI to automate at least one part of their work. JPMorgan Chase, for example, says they invest over $12 billion every year in AI and machine learning.
The global AI market in fintech went from $9.15 billion in 2022 to $11.59 billion in 2023, and it’s expected to hit $31.71 billion by 2027.
Some cool AI startups from the last 5 years include Lingxi in China, Token Metrics for investment research, WealthBlock for speedy investing with AI, and Bluesheets for cross-platform financial data processing.
But here’s the interesting part: the big fintech players prefer to support companies that are already doing well instead of jumping in on early-stage AI projects. For example, Chime, which uses AI to help people save money, scored $750 million in 2021.
Chatbots and Digital Wallets
Fintech is also going all-in on chatbots. By 2024, the global market for chatbots is expected to hit $142 billion, and banks are the biggest users. In 2021, 13% of banks already had chatbots, and 16% planned to get them, according to Cornerstone Advisors.
Bank of America has Erica, a digital assistant updating you on transactions and investments. Wells Fargo and JPMorgan Chase use Kasisto, a chatbot acting as a financial advisor. Glia bought Finn AI in 2022 to level up their customer service with AI.
Digital wallets and mobile payments are another big thing. In 2022, the global digital payments market hit $96.9 billion and is expected to grow to $111.9 billion in 2023.
Traditional payment methods are still the go-to for 66% of people, but digital payments are catching up with 56% of users.
Blockchain and Cryptocurrency
Blockchain is all about making financial transactions safer and more transparent. In 2022, the global cryptocurrency market hit $2 billion, and the number of blockchain wallets reached 80 million.
Startups like Ledn, TaxBit, and Syndicate are making waves in the world of blockchain and cryptocurrency.
Big fintech companies are investing in these areas too. Stripe got $600 million in 2021, and Payoneer snagged $300 million in investments.
Online Lending and Crowdlending
Online lending is getting popular, especially for small businesses and individuals. The crowdlending market hit $1 billion in 2021 and is expected to grow by 25.1% by 2030.
Startups like SoLo Funds, Figure, and Founderpath are helping people and businesses get the financing they need.
Big companies like Goldman Sachs are investing in these platforms too. Insight Investment dropped £100 million in SME financial services provider ThinCats in 2022.
Open Banking
Open banking is about making financial products more accessible. The market hit $16.1 billion in 2021, and it’s predicted to reach $128 billion by 2030.
Startups like Teller and FINQware are making moves in open banking, but big players like PayPal, JP Morgan Chase, and Visa are also jumping in.
What’s Next?
Even though there were some hiccups in 2022, fintech is still growing. The challenges the industry faces, like fraud and adapting to new tech, are getting tackled with cool innovations.
Expect more developments in chatbots and digital wallets, and keep an eye on blockchain, cryptocurrency, online lending, and open banking.
Fintech is here to stay, and big partnerships between established companies and startups are on the horizon. Some experts even think banks will be the leaders in fintech for the next decade.
So, get ready for more exciting changes in the world of fintech!
