Category: Fintech

Fintech (financial technology) is a word that refers to cutting-edge digital technology that aims to improve financial services and banking. In the financial industry, cutting-edge advancements like blockchain and artificial intelligence are ushering in new methods of conducting business. Digital currencies, banking, insurance, personal loans, and wealth management are just a few of the industries that are undergoing a digital makeover.

The financial sector has been buzzing for the past five years about the disruption fintech companies are making by offering consumers alternatives to established solutions. The tide is turning, according to statistics. Established businesses are more aware than ever of the possibilities and importance of these new technologies.

The financial technology sector is one of the fastest-growing in the world, with an average annual growth rate of over 25%. According to the most recent fintech data, the industry will be worth over $310 billion by 2022 if current trends continue. So, while fintech isn’t yet among the top ten worldwide revenue industries, it’s on its way. Is investing in fintech a smart idea? What are the top fintech companies? All of the answers, as well as some additional nerdy info, can be found here.

Fintech Statistics

• A large percentage of traditional financial firms (88 percent) expect part of their income to be lost to independent fintech firms during the next five years.
• In the first half of 2020, fintech businesses received $25.6 billion in funding from around the world.
• digital banking is gaining traction: 46% of consumers only utilise digital channels for their financial transactions.
• To enhance client retention, 77 percent of conventional financial institutions aim to expand their attention on innovations.
• Digital payments’ overall transaction value increased from $4.1 trillion in 2019 to $5.2 trillion in 2020.
• From $4.1 trillion in 2019 to $5.2 trillion in 2020, the overall transaction value of digital payments increased.
• Investors who want to capitalize on emerging trends — i.e., electric vehicles or remote work — may want to check out “thematic” exchange-traded funds. These ETFs provide a way for investors to engage in so-called thematic investing, which generally means buying stocks or other investments that may benefit from a particular trend (source)

By 2022, the Fintech Sector is Estimated to be worth $310 Billion

In 2018, the industry garnered $128 worth of investment from throughout the world. Experts predict that the industry’s compound annual growth rate (CAGR) will be 25%. In other words, $310 billion is expected to be invested in the sector by 2022. In 2018, fintech businesses got more than half of the $254 billion in yearly venture capital financing.

By 2022, North America will have the most Financial Startups

North America has the most fintech startups, whereas Asia has the most revenue-generating fintech businesses. There are 8,775 financial services startups in North America, according to statistics. There were 7,385 people in EMEA (Europe, the Middle East, and Africa), and 4,765 in APAC. (Asia-Pacific). It’s amazing to observe how the number of fintech companies has skyrocketed by 2020. In North America, Europe, and the Asia Pacific, respectively, there were about 5,600, 3,500, and 2,800 newly founded fintech in 2018 and 2019.

There are 79 Unicorn Fintech Firms throughout the World as of January 2021

A unicorn company is a privately owned firm with a market value of $1 billion or more. Decacorns are valued at over $10 billion, while hectares are valued at over $100 billion. As of the beginning of 2021, there were over 500 unicorn firms valued at a total of $1,780 billion. According to data, six new fintech unicorns earned this prestigious status in January 2021.

The Global X Fintech ETF’s Per-Share value more than Quadrupled from $15 in 2016 to $47 in 2022

Investors can have access to fintech investment opportunities through the Global X Fintech fund. The stock’s share price and overall health have been steadily rising in value, with no signs of decreasing in the near future.

Stripe, Located in San Francisco, is the most Valuable Financial Technology Company in the United States, with a Market Capitalization of $35 Billion.

Stripe began as a payment processing service for small businesses in 2011. Among the company’s current clients are Facebook and Amazon. As a result of these high-profile hires, Stripe’s value has climbed to $35 billion.

Ripple, a $10 billion payment protocol and exchange network provider, is the second-largest company, with a market valuation 3.5 times that of the next-largest company.

By 2022, Artificial Intelligence will have saved the Insurance Sector $1.3 Billion.

Fintech’s disruptive potential has generated a lot of discussions. Artificial intelligence plays a major role in this. Computers can automate post-accident data collection, analyze photos of accident scenes, and perform a number of other activities in the insurance industry, allowing insurers to handle claims faster and for less money. Savings of $1.3 billion are expected by 2021.

By 2022, Digital Wealth Management Firms with a Retail Focus are Anticipated to have $600 Billion in Assets under Management

The majority of this expansion has come from existing financial institutions. This is due to the fact that emerging fintech businesses frequently provide low- or no-fee stock trading and robo-advisor services, resulting in lower profit margins.

Established businesses are also beginning to adopt this business model, thus the future of these startups is questionable.

Asian Businesses have a Long Track Record of Success Across the World

Because most worldwide leaders are headquartered in Asia, it appears that the Asian market dominates the global financial technology sector. With a $16 billion value, Paytm deserves to be mentioned among the finest. The online payment method originated in India and has recently grown in popularity. With a $14 billion value and investors such as SoftBank and Uber, Grab is another worldwide leader. Grab is a ride-hailing, food delivery, and digital payment service company founded in Singapore.

According to global fintech statistics, GoJek, which is based in Indonesia, is another of the top fintech companies. This ride-hailing and online payment firm have received a $12 billion valuation. No fintech, on the other hand, comes close to the Ant Group of China. Remember this name the next time you’re curious about the world’s largest Fintech firm. It has a current market capitalization of $131 billion dollars. This comes as no surprise given that the Ant Group owns Alipay, the country’s largest digital payment network with over a billion users.

As the name suggests, Robo Advisors are digital applications that provide customers with financial advice based on algorithms, artificial intelligence, or mathematical formulae. Robot adviser is the abbreviation for Robo Advisor. The phrase Robo Advisor, on the other hand, is incorrect. Rather than a real robot, a Robo Advisor is a digital construct, most often an algorithm or artificial intelligence (AI).

Artificial Intelligence (AI) has been altering several areas and boosting efficiency by employing enhanced datasets for the past few years. Robo-advisory is one of those fields where AI has accelerated progress.

Robo advisers are software robots and are not technically robots. It is true that the AI that powers robot advisers is comparable to the software that supports them. Robo-advisors connect with investors using smartphone applications or the internet.

Using the software, consumers may select equities for their portfolios based on the desired balance, and it can also give limited financial advice to clients. AI-based Robo-advisors, like other expert systems, are designed to replicate the judgment and behavior of an experienced human expert in a particular sector.

Financial institutions can use Virtual Assistance (VA) software to handle relatively basic inquiries while referring the more complicated ones to human advisers to save money. Often, even human employees utilize Robo-advisors to help them react to consumer demands more efficiently.

The software is very affordable to buy and maintain, given that financial advisers are generally well-paid. Investors also perceive Robo-advisors as a cost-effective method of delivering investment guidance. According to some, robo-advisors might help improve financial literacy by allowing investors to examine choices without feeling rushed, as they would when interacting with an actual person.

What is an AI Robo Advisor?

These influential new and best robo advisors employ AI and machine learning to evaluate assets. As it turns out, some of these robot advisors will do much more than provide financial advice!

Investment selection and retirement planning are now activities that Robo-advisors can perform. First, most of this software asks users to sign up and complete a brief survey about their present financial position and their future aspirations. As a result of this, the software analyses the user’s present financial situation.

A few applications may propose financial actions to increase a user’s wealth and automatically invest or rebalance the user’s allocations. As a result, specific applications can track the user’s expenditure based on bank or credit account activities and recommend budgets.

These applications make wealth management so convenient that Deloitte estimates that the assets these digital tools will handle in the US alone may reach $5 trillion to $7 trillion by 2025.

Will Artificial Intelligence (AI) Advisors Replace Robo Advisors?

• Investment institutions are experimenting with AI because Robo Advisors have proved challenging to pitch to a wealthy clientele. Reuters reports that UBS sold its SmartWealth robot advisor to SigFig in 2018. The Swiss bank sold SmartWealth because it was losing money.
• As Numerai’s founders explain, they expect to succeed where UBS failed by developing AI advisers to perform everything human investment bankers and fund managers can accomplish.
• In reality, firms like Numerai are developing artificial intelligence (AI) that can handle money without human intervention. But AI advisors of today are still a long way from attaining this aim. Many businesses, on the other hand, are working to create AI advisers that can “think” for themselves.

What Types of Robo Advisors Are There?

• Many Robo Advisors are now available on the market today. Nearly every day, new Robo Advisors come on the market! Simple investing software like Vanguard’s Personal Advisor Services is the most popular Robo Advisors.
• Apps for investing in the stock market monitor accounts and execute trades based on specified conditions. If the price-earnings ratio (PE Ratio) of a company is too high, for example, and investment software might sell it to the user.
• M1 and Robin Hood, two automatic investment applications, provide fast, low-cost access to the financial markets. For example, when it comes to M1, consumers may choose their stocks and ETFs or choose from 80 professionally managed portfolios.
• Our goal is to offer business executives an overview of the artificial intelligence capabilities of five different Robo-advisor businesses by comparing them head-to-head.

Hybrid Advisors vs. Robo Advisors

• Human, financial specialists are not used by several wealth management businesses, like Wealthfront. Wealthfront, on the other hand, relies on computers and bots to handle everything. The Automated Financial Management service, for example, is advertised on Wealthfront’s site.
• Morgan Stanley and Vanguard, meanwhile, are conventional financial businesses that favor hybrid advisers over traditional advisors, according to the report. This type of company makes use of hybrids since they deal with a diverse group of clients.
• Fintech technologies like Robo Advisors have a lower trust rating among individuals who are new to the financial markets and investing. In general, They are more efficient and function better with a significant number of clients.
• Contrary to popular belief, robots can give customers a greater degree of support than human advisors. They can reply to phone calls and emails in real-time and operate 24 hours a day, seven days per week. Another benefit of Robo Advisors is their ability to respond immediately to basic requests, such as selling or purchasing stocks or providing balance information.
• Finally, Robo Advisors may be accessed instantly via cell phones and the internet. Consequently, Robo Advisors are ideal for investors who wish to maintain a high level of control over their portfolios.