Market Overview

The global AI in fintech market is a revolutionary amalgamation of Artificial Intelligence (AI) and the finance industry to resolve human problems by improving efficiency. Additionally, the utilization of AI in the fintech companies has enhanced the precision and customer engagement level by accelerating the customer query process. Further, some of the benefits include accurate decision-making, automated customer support, fraud detections, claims management, insurance management, automated virtual financial assistants, predictive analysis in financial services, and wealth management for masses. Thus, the early adoption of AI in the financial institutions has paved the way for the fintech companies, thereby estimating a massive adoption up till the forecasted year.

The global AI in the fintech market is expected to grow from USD 6.7 Billion in the year 2019 to USD 39.8 Billion in 2029 at a compound annual growth rate (CAGR) of 22% in the forecast period.

Market Drivers

Increasing Availability of Data Sources to Boost the Market

The continuous innovation in the fintech industry has broadened its scope and diversified the segments at a rapid pace. It has improved footprints in personal finance reporting, personal lending, household and company loans, savings, financial advice services, and numerous other data streams, thereby increasing data sources. Some of the widely used data sources for the fintech products are verification services, card management services, payment services, mobile app and web analytics, customer support tools, and open data sources. The use of AI and external data sources will offer important insights.

According to the 'AI in Financial Services Survey Report' published by the World Economic Forum, among the combination of different data sources, the most commonly used data source used widely was the internally generated data source usually obtained from the operations of the company. It was followed by customer-generated data and then the publicly available free data. Further, the report also demonstrated that the data related to payments was highly utilized among the external customer data, followed by the investment management data, market infrastructure, among others. Thus, the increasing availability and the utilization of data sources will help fintech companies use AI to produce accurate results.

Increase in the Demand for Process Automation

Process automation refers to the use of digital technology to execute a manual or automated system or process. The fintech companies utilize differential process automation services to manage their databases, microservices, and Software as a Service (SaaS) applications. Some of the other tasks done by the process automation services are to provide an agile platform to facilitates rapid time-to-deployment, adapts to changing conditions, elegant, unified solutions to both integration and automation, orchestrating internal processes across SaaS applications, among others.

The certain benefits driving the demand are accurate data and industry insights, eliminating the risks involved with routine duties, and reducing the time process automation takes to achieve a resolution. Further, the increasing investments by the robotic process automation and AI firms such as UiPath have raised USD 255 million for new product development and research and development. Thus, the aforementioned factors play a massive role in the growth of the market.

Market Restraints

Lack of Skilled Labor

The AI in the fintech market uses various technology and databases to carry out specified actions. The lack of competent experts for implementing and applying AI in small and medium-sized businesses has hindered its growth. As reported by the World Economic Forum, more than 52% of workers would need to be reskilled by 2022 due to persistent and fast technical developments. In addition to the lack of awareness of suitable data masking techniques – static and interactive, businesses' selection of inappropriate software would further increase their cyber-crime risks, thereby restricting the global AI's growth in the fintech market.

Impact of COVID-19

The pandemic has caused an almost global lockdown backed up by strict government regulations such as social distancing and quarantine. A surge in digital service adoption, primarily financial services, was observed due to the physical distancing. It led to a transition of most of the businesses towards digital means of payments. Further, the lack of staff available at the offices led these companies to utilize robotic process automation (RPA) and AI to assist the customers.

Segmental Analysis

Componential Segment to Hold Significant Share

The global AI in the fintech market is divided into solutions and services based on the component. The solutions segment caters to the highest market share due to the larger deployment of AI solutions in the finance sector. As per the World Economic Forum, the fintech has anticipated by 2030, AI utilization in these companies will expand their workforce by 19%. Further, the fintech companies use software tools (a part of the solutions segment) to install AI-enabled applications in the finance sector to collect a significant volume of precise and full-time data. The services segment, especially the managed services, is anticipated as the fastest growing internet during the high need to maintain and manage the software.

Cloud Computing to Propel the Global AI in Fintech Market

Based on the deployment type, the AI in the Fintech market is divided into on-premise and cloud. The cloud segment caters to the highest share owing to the flexibility and the agility offered by cloud computing for the Fintech use cases. Additionally, cloud computing seamless integration with technologies such as Artificial Intelligence, machine learning, and others has bolstered its utilization.

According to The World Economic Forum, The Modern Physics of Financial Services reported that cloud computing provides the data storage and computational capacity required to train modern AI models, making cloud technology essential to AI solutions deployment. Further, the on-premises computing solution has a modest market share. The need for a separate storage facility and a server and its maintenance costs make it an expensive option. However, for many businesses, its complete ownership and greater security have made it a desirable option.

Regional Analysis

North America

North America caters to the maximum share in the Global AI in Fintech market owing to the presence of most of the major players such as Microsoft (the U.S.), Google (the U.S.), Salesforce.com (the U.S.), IBM (the U.S.), Intel (the U.S.), Amazon Web Services (the U.S.), Inbenta Technologies (the U.S.), IPsoft (the U.S.), Nuance Communications (the U.S.), and ComplyAdvantage.com (the U.S.). Further, the presence of advanced technical infrastructure has bolstered the deployment of AI in enterprises.

As stated by one of our paid sources, in 2020, North America was accounted for the highest number of fintech startups due to many internet user penetration rates, prominently mobile internet. According to the 'Mobile Economic 2020' published by the GSM Association, mobile data usage in North America is expected to be almost fivefold. Further, with the advent of 5G, the AI in North America's fintech market is anticipated to flourish shortly.

Asia-Pacific

Asia-Pacific is accounted for as the fastest-growing region in the global AI in the fintech market owing to the favorable government initiatives, foreign direct investments in the fintech startups, and others. As per our paid sources, the Fintech startups in the Asia Pacific in 2020 were 4,765, almost double the number in 2019. Further, the initiatives by the governments such as the Digital India initiative by the Government of India, the Digital Economy Development Agency, the Government of Thailand, among others, have increased digitalization in these countries. Further, the enhancing IT infrastructure, skilled professional, investment, and partnerships by private and public players have fostered this region's growth.

Key Players

According to Straits research, the major key players in the Global AI in Fintech Market are Microsoft (the U.S.), Google (the U.S.), Salesforce.com (the U.S.), IBM (the U.S.), Intel (the U.S.), Amazon Web Services (the U.S.), Inbenta Technologies (the U.S.), IPsoft (the U.S.), Nuance Communications (the U.S.), and ComplyAdvantage.com (the U.S.) among others.

Recent Developments

• On July 28, 2020, Microsoft collaborated with Mastercard to provide financial stability and sustainable development opportunities. Further, the collaboration aims to accelerate Mastercard Labs' cloud-based native research and development operations, allowing Azure and AI to advance Mastercard Labs' mission to de-risk and commercialize innovations and platforms for digital commerce, strengthening the market.
• On August 17, 2020, Nuance Communication expanded its Cloud-Based Dragon Professional Anywhere Solution to the United States. The geographic expansion was aimed towards the various industries such as law enforcement, social services, financial services, and legal. The AI-powered solution will enable to create high-quality documentation more efficiently, securely, and at scale, while reducing cost and boosting productivity.

AI in Fintech Market Segmentation

By Component

• Solutions
  • Software Tools
  • Platforms
• Services
  • Managed Services
  • Professional Services

By Deployment Mode

• Cloud
• On-premises

By Application Area

• Virtual Assistant (Chatbots)
• Business Analytics and Reporting
• Customer Behavioral Analytics
• Others (includes market research, advertising, and marketing campaign)

By Region

North America

• The U.S.
• Canada
• Mexico

Europe

• The U.K.
• Italy
• France
• Spain
• Germany
• Rest of Europe

The Middle East and Africa (MEA)

• Saudi Arabia
• Egypt
• South Africa
• Rest of MEA

Asia-Pacific

• India
• China
• Japan
• Australia
• South Korea
• Rest of Asia-Pacific

South America

• Colombia
• Brazil
• Chile
• Peru
• Argentina
• Rest of South America