The financial services industry has experienced a lot of digital transformation in recent years. In fact, according to new findings from the market research and consulting firm, The Business Research Company, the fintech-as-a-service (FaaS) market has grown from $327.51billion in 2023 to $386.39billion in 2024 at a compound annual growth rate (CAGR) of 18 per cent.
These new findings were published in The Business Research Company’s comprehensive report on the Global Fintech-as-a-Service (FaaS) Market Size and Trends Analysis with Forecast 2024-2033. It also estimates that the market will grow to $745.53 billion in 2028 at a compound annual growth rate (CAGR) of 17.9 per cent.
The growth in the forecast period can be attributed to AI and automation, open banking expansion, blockchain and cryptocurrency, globalisation of services, data security and privacy. Major trends in the forecast period include embedded finance, API ecosystem growth, regtech and compliance solutions, evolving payment solutions, and sustainable finance focus.
Growth of digital banking
Complementing the adoption of digital transformation, there has also been a rise in mobile and internet penetration which in turn has seen an increase in digital and mobile banking. FaaS plays a significant role in digital banking by providing mobile applications, web-based platforms, APIs, and more sophisticated applications that use artificial intelligence and machine learning to provide financial advice.
FaaS also offers digital banking solutions, which enable companies to provide their customers with online banking services. For instance, in July 2023, according to a report shared by Finder.com, an Australia-based independent comparison website, an estimated 93 per cent of Brits were using online banking in 2022.
Around another 5.3 million Brits (10 per cent) intend to get a digital-only bank account in 2023. By 2028, the number of digital-only bank account holders is predicted to be 22.6 million (43 per cent). Therefore, the increase in the shift towards digital banking and payments is driving the growth of fintech as a service market.
Technological innovations
Major companies operating in the FaaS market are focused on innovating technologically advanced solutions to strengthen their position in the market.
For instance, in April 2023, Valley National Bank, a US-based regional bank holding company, launched a new fintech innovation platform powered by NayaOne. Through a straightforward and user-friendly onboarding process, the platform is already integrated with the goods and services of numerous financial businesses. It offers a set of tools for producing and using synthetic data, enabling Valley and its fintech partners to quickly test-drive novel solutions in a controlled, secure environment.
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Key players of the market
- Stripe Inc.
- Rapyd Financial Network Ltd.
- Visa Inc.
- Mastercard Incorporated
- Fiserv Inc.
- Block Inc.
- Fidelity National Information Services Inc.
- Global Payments Inc.
- NCR Corporation
- Broadridge Financial Solutions
- Worldline SA
- Diebold Nixdorf Incorporated
- Coinbase Global Inc
- WEX Inc.
- Jack Henry and Associates Inc.
- Chime Financial Inc.
- Finastra
- Green Dot Corporation
- Envestnet Inc.
- Adyen NV
- Temenos AG
- Revolut Ltd.
- Marqeta Inc.
- Airwallex Pty Ltd.
- Plaid Inc.
- Finix Payments Inc.
- Square Capital LLC
- Dwolla Inc.
- Synctera Inc.
- Solid Financial Technologies Inc.