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AI in Fintech Market - Growth, Trends, Forecasts (2020 - 2025)

The AI in Fintech Market is segmented by Type (Solution, Services), Deployment (Cloud, On-premises), Application (Chatbots, Credit Scoring, Quantitative & Asset Management, Fraud Detection, and Other Applications), and Geography.

Market Snapshot

Study Period:

2020-2025

Base Year:

2019

Fastest Growing Market:

Asia Pacific

Largest Market:

North America

CAGR:

23.37 %

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Market Overview

The global AI in the Fintech market was estimated at USD 6.67 billion in 2019 and is expected to reach USD 22.60 billion by 2025. The market is also expected to witness a CAGR of 23.37% over the forecast period (2020-2025). Artificial Intelligence improves results by applying methods derived from the aspects of human Intelligence but beyond human scale. The computational arms race since the past few years has revolutionized the fintech companies. Further, data and the near-endless amounts of information are transforming AI to unprecedented levels where smart contracts will merely continue the market trend.

  • In the finance industry, AI is used to examine cash accounts, credit accounts, and investment accounts to look at a person's overall financial health, keeping up with real-time changes and then creating customized advice based on new incoming data. AI and machine learning have benefited the banks and fintech as they can process vast amounts of information about customers. This data and information are then compared to obtain results about suitable services/products that customers want, which has aided, primarily, developing customer relations
  • Also, the increasing demand for process automation among financial organizations​ is driving the market. Process automation is one of the significant drivers of Artificial Intelligence in financial organizations. However, it is further evolving into cognitive process automation, where AI systems can perform even more complex automation processes.​ For instance, in May 2020, Traydstream, a FinTech that scans trade documents with artificial Intelligence (AI), partnered with Infosys Finacle to implement blockchain technology and further automate trade finance. The partnership will allow Finacle's blockchain tech, called Finacle TradeConnect, to be integrated with Traydstream's platform, which uses AI to scan documents and cut down the time it takes to check on rules or regulations in trade, where mistakes can be costly and time-consuming to correct.​
  • Moreover, credit card companies are implementing predictive analytics into their existing fraud detection workflows to reduce false positives. For instance, in May 2020, SparkCognition, an industrial AI company, announced that the Japanese AI and fintech company, MILIZE Co. Ltd, would offer financial institutions fraud detection and anti-money laundering (AML) solutions. These solutions are built using the automated machine learning software of SparkCognition. As a result, the software detects fraudulent transactions with about 90% accuracy, which is anticipated to lead to a significant improvement in the credit card companies' profitability
  • AI is further on its way to becoming mainstream in Financial Services within the short term. For instance, according to a survey conducted by Cambridge Centre for Alternative Finance (CCAF) in 2020, 85% of all respondents in the study used some forms of AI, with the fintech companies being slightly ahead of incumbents in the adoption of AI. Owing to these benefits offered by AI technology, fintech companies are increasingly demanding based solutions. Moreover, the fintech industry is witnessing a significant increase in the number of start-ups. These players are also highly attracted to the adoption of Artificial Intelligence to automate and expand their businesses
  • Additionally, as brick and mortar retailers continue to face challenges due to the onset of COVID-19 pandemic, many merchants are implementing point-of-sale financing alternatives as a potential new avenue for growth. Apart from utilizing current data like bank account statements for underwriting, these players are further using AI models to assess consumer behaviors based on their transaction history, product purchase, and other data points to create a sharper customer risk profile.​
  • Also, banks and financial institutions are adopting AI solutions to harness information and insights locked away in unstructured documents and automate the manual process done traditionally by banks in double-quick time.​For instance, in April 2020, Temenos, the banking software company, announced the launch of eight propositions – using innovative Explainable AI (XAI) and cloud technologies to help banks and financial institutions in their immediate response to the Covid-19 crisis.

Scope of the Report

AI computers perform several functions like humans, such as learning, decision making, planning, and speech recognition. In the financial technology sector, Artificial intelligence plays a preeminent role. It reduces time, increases efficiency, and also decreases the chances of error. AI is beneficial in generating a high volume of reports.​ The study characterizes AI in fintech based on the type, service (including professional and managed services), end-user industry, and Geography.

By Type
Solutions
Services
By Deployment
Cloud
On-premise
By Application
Chatbots
Credit Scoring
Quantitative and Asset Management
Fraud Detection
Other Applications
Geography
North America
Europe
Asia-Pacific
Rest of the World

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Key Market Trends

Quantitative and Asset Management​ to Witness Significant Growth

  • Fintech has been undergoing a continued evolution in the landscape of investment management. Advanced technology and solution adoption, including the use of big data, AI, and machine learning (ML) to help businesses evaluate investment opportunities, optimize their investment portfolios, and mitigate the associated risks have been clinical in the technology adoption.
  • The investment advisory services, for instance, are undergoing radical changes with the growth and evolution of automated wealth advisers. These advisers can assist the investors without the intervention of a human adviser, and can also be used in combination with a human adviser. It extends the ability to provide tailored, actionable advice to its investors with ease of access, at a partially lower cost.​
  • In the area of financial record keeping, blockchain, and distributed ledger technology are augmenting the AI adoption by creating new ways to record, track, and store transactions for financial assets. For instance, Sentifi, a Swiss Fintech company established in 2012, uses AI and ML to enable investors and other financial market stakeholders to tap into the online available financial intelligence of millions of persons and organizations.
  • Furthermore, asset management companies can gain substantial benefits through the adoption of AI and ML. These technologies can help provide real-time actionable insights and facilitate portfolio management decisions. Sub-sets of AI can empower asset managers to streamline processes to optimize investment decisions and processes.
  • In October 2019, MDOTM, and Raiffeisen Capital Management, one of Austria’s largest fund managers, announced a new strategic partnership. With this new initiative, the range of Raiffeisen Capital Management’s sustainable funds would be used by MDOTM to provide to the market SRI investment solutions that benefit from the efficiency brought by AI technology in portfolio construction.​
  • Moreover, In May 2020, Boosted.ai, the prominent distributed ML platform for global investment professionals, announced the closing of a USD 8 million USD Series A financing round. Boosted.ai would use the funding to continue improving Boosted Insights, its proprietary ML platform that empowers portfolio managers, analysts, and chief investment officers (CIO’s) to augment their existing investment processes, source new ideas and manage risks.

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North America Accounts for the Significant Market Share

  • North America is one of the largest and most advanced markets for A.I. in the world. The region has also registered the maximum adoption of A.I. in Fintech solutions due to the strong economy, robust presence of prominent A.I. software and system suppliers, and combined investment by government and private organizations for the development and growth of research & development activities.
  • According to Baker McKenzie, the ongoing economic expansion in the U.S. has attracted considerable investment in the fintech sector. Payments and Insuretech continue to dominate the landscape of the fintech sector in the country. According to C.B. Insights, the country's fintech startups have witnessed about 70+ mega-rounds of funding accounting to more than USD 100 million,
  • In 2019. SoFi, a personal finance platform based out of the San Francisco, has raided the maximum amount (USD 500 Million) in a Series G Round. SiFi is followed by Klarna (USD 460 Million), Robinhood (USD 323 Million), Home & rental insurer Lemonade (USD 300 Million), etc.
  • Some of the investments in the field of A.I. are such as, in June 2020, Betterview, a US-based insuretech, and A.I. startup, has secured an additional of USD 7.5 million, adding up to USD 17 million from Maiden Re, a reinsurer based out Bermuda. The A.I. startup utilizes computer vision and A.I., to capture and analyze imagery of data for buildings and properties throughout the U.S. to be used by the property insurance industry in underwriting.
  • Moreover, the region accounts for a significant share of the millennial population, particularly the United States. Millennials have a clear preference for accomplishing tasks through digital applications and services that fintech companies are better at providing than banks, in terms of speed and personalization. According to U.S. Census Bureau population estimates, there are around 72.1 million millennials, as of 2019. However, according to Digital Banking Report 2019, the adoption rates of fintech services in Canada (50%) and the U.S. (46%) are some of the lowest.​
  • According to the World Payments Report published by World Bank, this region has one of the highest penetration, in terms of citizens' bank accounts, and has the highest concentration of ATMs per 100,000 people. The above factors significantly drive the market in the region.

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Competitive Landscape

AI in Fintech market is moving towards fragmented owing to the presence of many global players in the market. Further various acquisitions and collaboration of large companies are expected to take place shortly, which focuses on innovation. Some of the major players in the market are IBM Corporation, Intel Corporation, Microsoft Corporation, among others. Recent developments in the market are -

  • April 2020 - Fenergo, the provider of digital transformation, customer journey and client lifecycle management (CLM) solutions for financial institutions, and IBM signed an original equipment manufacturing (OEM) agreement that will allow the companies to collaborate on solutions that can help clients address the multitude of financial risks they face.​
  • May 2020 - Sentifi AG announced the expanded alternative data-based analytics to surface investment opportunities and manage risks. Sentifi’s new analytics solution includes detection of the sector, industry outliers, ESG events with potential asset valuation impact, and investment themes trending real-time while offering investors the ability to detect outliers within their portfolio. Investors can assess portfolio sentiment performance to the custom benchmark and quickly identify significant market events and impacted sectors, industries, and assets.

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Table Of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions and Market Definition

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS

    1. 4.1 Market Overview

    2. 4.2 Industry Attractiveness - Porter's Five Force Analysis

      1. 4.2.1 Bargaining Power of Suppliers

      2. 4.2.2 Bargaining Power of Buyers/Consumers

      3. 4.2.3 Threat of New Entrants

      4. 4.2.4 Threat of Substitute Products

      5. 4.2.5 Intensity of Competitive Rivalry

    3. 4.3 Emerging Uses of AI in Financial Technology

    4. 4.4 Technology Snapshot

    5. 4.5 Market Drivers

      1. 4.5.1 Increasing Demand For Process Automation Among Financial Organizations

      2. 4.5.2 Increasing Availability of Data Sources

    6. 4.6 Market Restraints

      1. 4.6.1 Need for Skilled Workforce

    7. 4.7 Assessment of Impact of COVID-19 on the Industry

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Type

      1. 5.1.1 Solutions

      2. 5.1.2 Services

    2. 5.2 By Deployment

      1. 5.2.1 Cloud

      2. 5.2.2 On-premise

    3. 5.3 By Application

      1. 5.3.1 Chatbots

      2. 5.3.2 Credit Scoring

      3. 5.3.3 Quantitative and Asset Management

      4. 5.3.4 Fraud Detection

      5. 5.3.5 Other Applications

    4. 5.4 Geography

      1. 5.4.1 North America

      2. 5.4.2 Europe

      3. 5.4.3 Asia-Pacific

      4. 5.4.4 Rest of the World

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Company Profiles

      1. 6.1.1 IBM Corporation

      2. 6.1.2 Intel Corporation

      3. 6.1.3 ComplyAdvantage.com

      4. 6.1.4 Narrative Science

      5. 6.1.5 Amazon Web Services Inc.

      6. 6.1.6 IPsoft Inc.

      7. 6.1.7 Next IT Corporation

      8. 6.1.8 Microsoft Corporation

      9. 6.1.9 Onfido

      10. 6.1.10 Ripple Labs Inc.

      11. 6.1.11 Active.Ai

      12. 6.1.12 TIBCO Software (Alpine Data Labs)

      13. 6.1.13 Trifacta Software Inc.

      14. 6.1.14 Data Minr Inc.

      15. 6.1.15 Zeitgold GmbH

      16. 6.1.16 Sift Science Inc.

      17. 6.1.17 Pefin Holdings LLC

      18. 6.1.18 Betterment Holdings

      19. 6.1.19 WealthFront Inc.

      20. 6.1.20 Sentifi AG

  7. *List Not Exhaustive
  8. 7. INVESTMENT ANALYSIS

  9. 8. FUTURE OF THE MARKET

** Subject to Availability

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