FinTech: the explosion of digital transformation in financial services

The global COVID-19 pandemic increased the demand for digital services and financial services were no strangers to change, which has led to the rise of FinTech.
FinTech: the explosion of digital transformation in financial services

FinTechs are part of a global revolution to make financial services easier, faster and simpler. They are changing the way we save, spend, lend and invest money. Whether competing with, cooperating with or supporting traditional financial institutions, they are reshaping financial services in real time for global demand.

The challenges have not been minor but the results reflect that technological innovation in financial services is irreversible.

How much has the sector grown in recent years?

The latest FinTech 2021 global FinTech ranking prepared by Findexable and Mambu, covers more than 80 countries and 11,000 FinTech companies worldwide. According to the methodology of this index, to enter the ranking a country or city must have companies with at least 10 headquarters. In the first 15 months of the pandemic, 50 cities and 20 new countries met this requirement and therefore entered the global ranking. This is one of the indicators of the expansion, the proliferation of companies that it is generating.

A decade ago when FinTech companies started to grow, it was easy to label them as irrelevant, but the pandemic has shown that digital financial services are key to the functioning of an economy. Investors have realized this relevance and between April 2020 and April 2021 FinTech in the unicorn category grew from 61 to 108. In this period, the combined value of FinTech unicorns more than doubled to $440 billion, and the FitTech sector came to represent more than 20% of the total value of tech unicorns.

Fintech for the future

There is growing evidence that FinTech solutions are enabling more people to access basic financial services such as savings in emerging economies. But there is still work to be done. The study, conducted by Findexable and Mambu, found that the availability of financial services does not necessarily result in increased demand and usage for these services, especially among vulnerable populations; in other words, FitTech is an accelerator for people’s financial inclusion, but it is not a sufficient condition on its own.

In a survey conducted by Mambu for the same study, it became evident that consumers of financial services expect FinTech to educate them on the best uses of financial products, and in this sense, it is recognized that FinTech’s role in improving the financial health of consumers and supporting the responsible use of financial services is still a challenge.

It would be imprudent to claim that the FinTech industry alone can solve these major problems in the financial world. However, it can play a key role in building bridges to reduce access issues, support responsible innovation and facilitate the financial services ecosystem.

You can learn more about how Fintech is currently influencing today’s financial and digital marketplace by listening to our latest podcast.

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