Bryan Zhang, executive director and co-founder of the Cambridge Centre for Alternative Finance at The University of Cambridge Judge Business School, presented research on the future of global fintech, conducted in collaboration with the World Economic Forum.
The study gathered data from 227 fintech companies across five industry verticals—digital lending, digital capital raising, digital payments, digital banking and savings, and insurtech—and six regions: Asia-Pacific, Europe, Latin America and the Caribbean, Middle East and North Africa, the US and Canada, and Sub-Saharan Africa.
Key areas investigated include business demographics, market performance, growth factors, regulatory perceptions, customer engagement, and fintech activities with societal and economic benefits.
Officially launched at a press conference in Davos during the WEF’s Annual Meeting, the report titled ‘The Future of Global FinTech: Towards Resilient and Inclusive Growth’ reveals that artificial intelligence (AI) is expected to be the most relevant topic for fintech development in the next five years, as noted by 70% of respondents. Embedded finance, the digital economy, and open banking were nearly tied as the second most significant factors, with 53%-54% of responses.
The research indicates that fintech firms face challenges regarding environmental and inclusion goals, with 41% highlighting the need for sustainable finance schemes and 31% deeming existing efforts ineffective. Although 51% of fintech firms cite consumer demand as the primary growth driver, nearly 70% of fintechs in Latin America and the Caribbean identify it as a major support factor. Other key growth factors include the availability of a skilled workforce (39%) and a favorable regulatory environment (38%).
The study found that 56% of participants identified macroeconomic conditions as the top hindrance to growth. In Latin America and the Caribbean, the funding environment presents a significant challenge, while in Sub-Saharan Africa, the funding atmosphere is generally more favorable for growth, with 52% of firms viewing it as supportive.
Moreover, 55% of fintech firms acknowledged the effectiveness of developing digital regulatory and supervisory infrastructures in facilitating growth. The shift towards fintech is helping deliver financial services and products to underserved demographics, with significant proportions of customers comprising women (39%), low-income individuals (40%), and those in rural or remote areas (27%).
Regional variations are evident, with female customers in the Middle East and North Africa accounting for 54% of overall transaction values, while European fintechs report the lowest proportion of female transaction values at 28%.
Drew Propson, head of technology and innovation in financial services at the World Economic Forum, expressed optimism about fintech’s robust performance post-pandemic, noting average global customer growth rates exceeding 50% from 2021 to 2022. However, he cautioned against challenges posed by a tough macroeconomic climate and reduced funding for fintech enterprises. He emphasized the need for ongoing data collection to better understand industry pain points and for committed support from both public and private sectors.
Bryan Zhang underscored that as the global fintech landscape continues to evolve, it is essential for regulatory and supervisory innovations to keep pace with financial advancements. He highlighted the report’s findings on the immense potential of digital financial services to enhance access for consumers and SMEs by offering more accessible, affordable, and tailored financial products and services.
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