World Economic Forum research: „the global fintech industry remains strong, with customer growth rates averaging above 50% across industry verticals and regions”

A new World Economic Forum report released last week shows the global fintech industry is demonstrating strength and resilience and continues, despite an unclear economic outlook, to expand financial services offerings to traditionally underserved consumers and businesses.

The Future of Global Fintech: Towards Resilient and Inclusive Growth, developed in collaboration with the Cambridge Centre for Alternative Finance (CCAF) at the University of Cambridge Judge Business School, draws from a global survey of over 200 fintech companies across five retail-facing 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) to take the pulse of the rapidly evolving fintech ecosystem.

The report finds that the majority of financial technology companies hold a positive view of their regulatory environment, with 63% rating it as adequate. Additionally, 38% of surveyed fintechs cite the regulatory environment as a major supporting factor for their operations and growth.

However, a substantial portion of fintechs find regulatory compliance challenging and the licensing and registration processes to be problematic, indicating an area where policy-makers and regulators could make improvements.

“It is highly encouraging to see fintech performance remain strong after the COVID-19 pandemic, with average global customer growth rates above 50% from 2021-2022; however, identified headwinds such as a difficult macroeconomic climate and decreased fintech funding cannot be ignored,” said Drew Propson, Head, Technology and Innovation in Financial Services, World Economic Forum. “Overcoming these challenges and realizing sustained social and economic benefits from the fintech industry will require continued data gathering to better understand pain points and committed support from public and private sector actors within financial services.”

Of the most promising findings of the report, the survey data highlights that many fintechs are actively expanding the provision of financial services and products to underserved segments of the population, and these segments also make up a sizeable proportion of their customer base and total transaction values. While most surveyed fintechs that are targeting underserved customer groups and offering tailored products are in emerging markets and developing economies (EMDEs), fintechs in both advanced economies and EMDEs are found to have a sizeable portion of their customer base from these groups.

The report also offers actionable insights to public and private sector decision-makers to facilitate further responsible growth of the fintech industry, including the importance of collectively working to streamline compliance processes, improve consumer education and increase trust in the financial system.

“As the global fintech industry continues to grow and evolve, it is imperative that the pace of regulatory and supervisory innovation match that of financial innovation. This report highlights the importance of having an appropriate and adequate regulatory environment that is conducive for the scalable and sustainable development of fintech,” said Bryan Zhang, Executive Director and Co-Founder, Cambridge Centre for Alternative Finance. “The study findings also indicate the enormous potential of digital financial services to widen access to finance for consumers and SMEs by providing more accessible, affordable and personalized financial products and services.”