The global fintech market is growing at a steady rate worldwide. In a recent study, BlueWeave Consulting, a strategic consulting and market research firm estimated the size of the global AI in fintech market at $10.14 billion in 2021 and forecasts that it will grow at a robust CAGR (Compound Growth Rate) of 15.8% between 2022 and 2028 to reach $28.11 billion by the end of the analyzed period, or €29.22 billion.
The financial sector has been the first to use AI for customer segmentation, fraud detection, credit scoring… The impact of AI on fintech (financial technology as a whole) has been enormous in recent years. The growth of SMEs worldwide has been a major factor in the expansion of this market, which BlueWeave Consulting has just analyzed.
Technological advances using AI in the fintech market
Use cases cited include the Gloria AI Edge Box, which was born in July 2021 as a collaboration between Qualcomm Technologies and Foxconn Industrial Internet and aims to accelerate the use of innovative smart applications. This new system processes 70 trillion activities every second.
Microsoft Corporation, meanwhile, has collaborated with Darktrace Holdings, a U.K.-based cybersecurity AI provider, to develop auto-ML technology that can identify vulnerabilities at the fastest machine speed. The partnership between the companies provides first-class protection against modern cyberattacks.
Increased demand for fintech from financial institutions
The expansion of not only banking, financial services and insurance (BFSI), but also education, energy, utilities, government and public sector, healthcare and life sciences, manufacturing, retail and e-commerce, telecommunications and IT sectors have directly impacted the growth rate of the AI market.
The demand for real-time information from customers, the demand for process automation from various banking and financial organizations, and the increasing demand for payment and loan personalization in the BFSI sector all have a significant impact on the growth of AI in the fintech market in the coming years.
As a result, the market is growing rapidly due to the increased need for process automation in financial institutions. The study reveals that there will be high potential for market expansion as small and medium-sized enterprises, especially those in developing countries, become more aware of the benefits of cloud-based firewalls.
BlueWeave Consulting points to the example of the Czech Republic’s Ministry of Finance, which launched a project in May 2022 to maximize the potential of fintech applications and data used in the country’s financial services. The ministry is responsible for economic policy, tax services, insurance, the state budget, banking and security.
Cloud-based segment growing rapidly
Fintech deployment is segmented into on-premises and cloud. The on-premises segment held a significant market share in 2021, as on-premises deployment allows companies to implement software or services on a financial institution’s hardware or infrastructure. However, from 2022 to 2028, the cloud segment is expected to grow at a faster CAGR, primarily due to AI-based algorithms that identify current standards, generate suggestions, and learn from historical data in a cloud environment.
Cloud computing and AI can increase performance, efficiency and digital security in data processing and authenticity. This automated method also eliminates human error in data processing. AI deployed in the cloud analyzes past data, adjusts based on it, offers recommendations, and evaluates current patterns.
The global outlook
The global AI in financial technology market has been studied by region: in North America, Europe, Asia Pacific, Latin America, Middle East, and Africa.
North America is expected to hold the highest market share, mainly due to the high emphasis on R&D-based innovations in the industrialized economies of the United States and Canada. These areas have the most competitive and scalable AI markets in fintech. However, Asia Pacific (APAC) is expected to see the highest growth over the analysis period due to continued innovation in AI technology and rapid growth of local companies.
The impact of Covid
The COVID-19 pandemic and subsequent blockades delayed the expansion of AI in the fintech market, with many retailers still financially impacted today. Many stores have used point-of-sale financing alternatives for future development. At the same time, these companies are using AI-based algorithms to analyze and improve the customer experience.
The competitive landscape
The competitive landscape of the AI in fintech market includes company financials, market potential generated by revenues, R&D investments, new market initiatives, global presence, production sites and facilities, production capabilities, company strengths and weaknesses, product launches, product breadth and depth, and application dominance.
The data points mentioned above are mainly related to the AI orientation of companies in the fintech market. The leading companies active in the AI in fintech market include LargeML, Inc (U.S.) and FICO Cisco Systems, Inc (U.S.).