U.S. Banking FinTech Market Size & Growth
Provide insights into the U.S. FinTech market, specifically related to this relationship with the financial/banking industry. Such insights should be related to but not limited to the types of fintech used in the banking industry in the U.S., any metrics of success, trends related to the fintech used, why and how it is used, threats to the fintech market from the financial/banking industry, the market size in terms of revenue, and growth trends.
2018 U.S. FinTech Market
- In 2018, the total value of investments made by the U.S. fintech industry into banking technology amounted to approximately $820,000,000.
- Fintech in the form of digital lenders have grown by 30.1% year-on-year from 2013-2017. By Q2 2018, the industry was worth about $41.1 billion, and was divided based into personal-focused lenders, SME-focused lenders, and student-focused lenders. By 2022, this fintech category is expected to experience an annual growth rate of 12.4%, making the industry worth $73.7 billion.
- The U.S. FinTech market is calculated to make up 57% of the global market size. This market is expected to grow with a CAGR of 8.6% up until the year 2024.
- The most popular financial services that are addressed with the fintech market in the U.S. are digital payments, personal finance, alternative lending, alternative financing, and online insurance distribution.
Popular FinTech Software
- Payment fintech software such as Venmo and Zelle are very popular in the U.S. financial industry today. As of Q3 2018, Zelle has experienced payment volumes that are about twice as much as those sent through Venmo. In Q1 of 2017, Zelle was processing $160 billion in payments, while Venmo was only managing $77.8 billion.
- Mobile bank apps are very commonly provided by financial institutions and used by consumers. On average, 13.7% of U.S. consumers report using these apps more than once per day, 24.4% use them once daily, 40.9% report using these apps a few times per week, and 20.9% say they use them once a week or less.
- The types of actions that mobile payment apps are typically used for include paying for items at stores/checkout (49.5%), paying bills (43.7%), sending/receiving money (42.9%), ordering food for pickup (34.3%), and sending/receiving cryptocurrency (6.2%).
Leading Financial Institutions in FinTech
- Bank of America and Wells Fargo are by far the most advanced in terms of fintech features that they offer to their customers. Out of 15 total features, the only feature not offered by Bank of America is the ability for customers to schedule branch appointments with the bank's tech platforms, and for Wells Fargo, they do not offer access to account statements.
- A majority of major banks in the U.S. do not offer picture bill pay technology for their customers. However, Bank of the West, U.S. Bank, and Wells Fargo are three of the only banks that do currently have this capability. No other financial institutions are currently working on this feature, either.
FinTech Trends for 2020
- According to Toptal's State of Fintech report, trends for the U.S FinTech industry are expected to include:
Proposed next steps:
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As the initial research was able to locate information related to the market size, growth, key players, and popular technologies/use cases, we suggest moving forward with research that will work to identify 3-4 pain points that financial institutions in the U.S. have with the fintech industry and its software. These pain points may be related to but are not limited to, compliance regulations, ease (or lack thereof) of use of fintech software, identifying the best software, consumer backlash, growing competitors, etc. For each pain point identified, we will explain 1) what the pain point is, 2) how the pain point negatively affects the relationship between fintech and financial institutions, 3) how the pain point is typically overcome, and 4) examples of 1-2 financial institutions that have struggled with the stated pain point.
Alternatively, we could move forward with research that will delve into the major players (financial institutions/banks) in the U.S. that are large competitors in terms of their use of fintech for business. For this option, we will specificallly focus on Bank of America, Wells Fargo, and will identify a third major competitor (if time permits) in this area. For each competitor, we will identify what types of fintech software they use, why, how, how customers feel about it, and how the financial institution feels about the software in terms of revenue production.