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Will you invest in the Fintech industry in the US?

The US is known as the land of the gold, the most scholarly people with big tech giants revolutionizing the market. The country with the most prolific iconic figures not just in the tech industry but in every different sector.

A crucial advantage of the Fintech industry is the use of eCommerce business. eCommerce platform with secured payment options in advance or refunds made the customers rely more on solutions that can be possible on one-on-one interaction. Or even get a personalized solution from the customer.

As the Fintech industry revolutionized and integrated the financial industry into a more customized platform for easy access to every authentic investor or partner. The market value of the Fintech sector in 2022 is estimated to be $309.98 billion, twice its value in 2018. (Financialexpress).

The Fintech industry comprises Digital payments, Digital investment, alternative lending, Alternative Financing, and Neo banking.

As per Statista, the users of the segments in 2022 are: –

Users of Fintech segments

The number of Fintech users (in millions) in different segments (2022)

The fintech market is attracting more than ever new players to dig deeper into the financial service value chain to provide new innovative solutions such as digital-friendly banking services, microfinancing, and Robo-advisor services in the existing bank accounts or integration the digital payments.

As per Statista, America is loaded with 5,779 fintech start-ups.  The top 5 segments identified by the US bank investors (CBInsights) are: –

payments and settlements, capital markets, data analytics, and accounting &tax.

The fintech segment “payments and settlements” attracted 19 US bank investors. Real estate, blockchain, and personal finance are also some of the fintech segments in the US but with fewer bank investors comparatively.

If you go by the transaction value in millions, digital payments are the top fintech segment. It recorded $6,699,201 transactions, personal finance $2,695,361, alternative lending $390,583 and alternative financing $20,000.

One of the major contributors to the growth of the Fintech sector is Artificial intelligence. The analyst of Futurism is predicting AI to be a $14 billion industry by 2023, 27 times more than what it was in 2015. The compound annual growth rate of AI to reach 17.2% by 2023.

With the current rising growth rate, the Fintech sector is expected to grow by 63.3% from 2019 to 2013. (Statista). The digital payments segment will see a growth rate of 8.2%, Personal finance with a growth rate of 18.5%, alternative lending at 1.5%, and Alternative financing with a growth rate of 8.0%.

The transaction value of the Fintech market in 2019 amounted to US$1,757,226.2m. With the current growth rate, the market is expected to see a volume of US$2, 870,192.1m in 2023.

The winner of this growth will be the digital payments segments with a volume of 1,342,931 million US in 2023. The segment of users will also increase to 80.4% in 2023.

Some of the top Fintech companies in the US are:-

  1. PayPal with a transaction volume of $333.8 billion in 2019. The revenue generated by Paypal in 2021- is 25.37 billion USD. The company recorded 426 million users by Q4-21.
  2. Venmo with a transaction volume of $1billion in 2016. The company was founded in 2009 and is owned by PayPal.
  3. Stripe is an Irish-American financial services and software company with dual headquarters in San Francisco, US, and Dublin. The company recorded a revenue of 7.4 billion USD in 2020. The company recorded 3.1 million active users. Stripe also found its users such as Lyft, Amazon, Slack, Glossier, Shopify, and Airbnb.

So what do you think about the $300 billion markets? As a new investor and not a hardcore financial person, digital payment segments can be a good market for you to start looking into such markets. However, as the segment is creating more wealth, it will create more competitors and may in the future become stagnant to grow for the new players.

The remaining sectors are not speeding up high as fast as the digital payment segment but are progressing steadily. If more innovative ideas and new ideas can be put into the remaining segments, it may create a steady wealth with less number of competitors to think about.

The Fintech market is growing high and with the more number of users and its secured and flexible way of money transaction. It is no doubt will become a highly potential valuable market zone with a high number of competitive players from different sectors.

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