US Fintech Market 2020-2025

October 22, 2020
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US FINTECH MARKET

KEY FINDINGS

  1. Absence of large M&A activity has brought the investment in Fintech to fall, the venture capitalist stays optimistic. Halt of mega M&Q deals like acquisition of WorldPay by FIS for US $42.5 billion, was the key driver for the decline in investment.
  2. Strategic deals, even in Covid-19. Such as acquisitions of Stripe, Chime, AvidXchange for strengthening their capabilities.
  3. Banks and Fintech companies are going to continue their partnerships and use them as a competitive advantage. It will help customer to get better services and quality.
  4. Service Offerings by the banks and Fintech are going to increase as their business mature and focus beyond the financial services. For example, telecom, energy, etc.
  5. The risk of data privacy and cyber-attacks, the Fintechs will be more stringent to make their business more secure with cybersecurity services.

 

INTRODUCTION

The Fintech market in the United States is growing rapidly. Every one out of three users use two or more Fintech app for financial services.

 

The US economy accounts for 57% of the global fintech market, as the consumer have acknowledged its benefits and convenience. As of 2019, US fintech companies received investment of $59.8 billion across 1,144 deals from M&A, VC and PE. Large fintech investment comes from the $22 billion acquisition of First Data by Fiserv.

 

In 2019, US had 12 new unicorns such as Hippo, Next Insurance, Ripple and Figure Technologies, Dave, etc. These unicorns have diversity of different subsectors in Fintech market.

 

There are segments such as digital payments, personal finance, alternative lending, alternative financing and insurance distribution, which are growing at a faster pace. Other segments such as Block chain, Robotic automation, Robotic advisors and Regtech (Regulations and technology) are upcoming in the Fintech market.

 

MARKET DYNAMICS

 

Regulator And Fintech

  • US government support fintech technologies and regulates its financial products and services provided to consumers. That generally include overseeing the contracting process and the delivery of information.
  • The government follow two-tier structure for regulating the financial products and services. Establishing general rules and regulations by government agencies and quasi-regulatory, by non-government entities under some other circumstances.
  • The product or services delivered through block chain or advanced artificial intelligence are usually a secondary consideration.

 

Key Drivers

  • Digital age Consumer: The adoption of technology-based solutions and mobile devices are the primary factors to encourage the Fintech players to exist in the market. With the rising demand of better financial and banking solutions, this industry has emerged as a key player to cater to the evolving needs of the consumer.
  • Low interest rates: The low cost on loan disbursement with the Fintech is the most attractive part. The Fedral Reserve has also helped by lowering the interest rate in the range between 1.5% and 1.75%.
  • E-commerce industries: The use of digital payments and e-wallets has become popular especially among the consumers due to rise in e-commerce shopping and services.

 

MARKET SEGMENTATION

 

US Transaction Volume

  • Digital Payments: Given the volume of transactions, the digital payment segment has the largest growth. It has recorded $765.5 Billion worth transaction in 2017. Digital payment includes all virtual payments such as mobile payments, app based payment, Net Banking, etc.
  • Personal Finance – This segment has recorded a transaction value of $ 201 Billion in 2017. The fintech has boosted by personal finance in US with the help of automated investment services. It has helped the consumers/investors to get better portfolio management services, strategizing investments, automated recommendations and data analytics.
  • Alternative Lending: There are a group of 16 digital lenders in US which grew loan segment 30.1% year on year. For example, SoFi offered wealth management services and high-yield deposits through SoFi Money. The digital lenders are expanding their scope of activities in funding and product offering as the opportunities arise from the market.

Other Segments

  • Regtech: is an emerging technology to help the companies to address challenges and risk related to regulatory. The key drivers are the cost of compliance, need of faster transactions, lower entry barriers with SaaS based offerings and support to regulatory bodies.
  • Blockchain: The key drivers are increasing capabilities of Fintech ecosystem, rising crypto-currency market, need for faster transaction and reduced cost of ownership.
  • Robotic Advisors: Asset under management in this segment was projected to reach $987 Billion in 2020.

 

 

FUTURE OF THE MARKET

In the future, more partnership and fintech start-ups are expected to come especially with SaaS model. Other major players are expected to join the Fintech market and expand their services which will benefit the customer platforms and data access.

The financial institutions and fintech start-ups must be ready to face internet giants such as Google, Facebook, Apple, etc. who can further their inroads in the part of financial services including payments, credit, insurance and deposits.

Effective partnership and collaboration with the technology will show new development in the banking industry soon.

Sl noTopic
1Market Segmentation
2Scope of the report
3Abbreviations
4Research Methodology
5Executive Summary
6Introduction
7Insights from Industry stakeholders
8Cost breakdown of Product by sub-components and average profit margin
9Disruptive innovation in the Industry
10Technology trends in the Industry
11Consumer trends in the industry
12Recent Production Milestones
13Component Manufacturing in US, EU and China
14COVID-19 impact on overall market
15COVID-19 impact on Production of components
16COVID-19 impact on Point of sale
17Market Segmentation, Dynamics and Forecast by Geography, 2020-2025
18Market Segmentation, Dynamics and Forecast by Product Type, 2020-2025
19Market Segmentation, Dynamics and Forecast by Application, 2020-2025
20Market Segmentation, Dynamics and Forecast by End use, 2020-2025
21Product installation rate by OEM, 2020
22Incline/Decline in Average B-2-B selling price in past 5 years
23Competition from substitute products
24Gross margin and average profitability of suppliers
25New product development in past 12 months
26M&A in past 12 months
27Growth strategy of leading players
28Market share of vendors, 2020
29Company Profiles
30Unmet needs and opportunity for new suppliers
31Conclusion
32Appendix

 

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