Artificial intelligence (AI), the digital economy, embedded finance as well as open banking are the issues regarded by fintechs as the most relevant for industry development in the near future, according to the Future of Global FinTech research.
The joint report by the Cambridge Centre for Alternative Finance (CCAF) at Cambridge Judge Business School and the World Economic Forum (Forum) reveals that the global fintech industry is maintaining growth momentum.
The report was officially launched at a press conference in Davos during the World Economic Forum’s Annual Meeting on Thursday, January 18.
Bryan Zhang, Executive Director and Co-Founder of the Cambridge Centre for Alternative Finance at The University of Cambridge Judge Business School, presented the findings via the panel discussion at the World Economic Forum’s annual meeting at Davos, and said that “the global FinTech industry is demonstrating strength and resilience”.
The global fintech industry remains strong, with customer growth rates averaging above 50% across industry verticals and regions, he said.
Also commenting on the findings, Drew Propson, Head, Technology and Innovation in Financial Services, World Economic Forum, said that 63% of the fintechs surveyed rated their regulatory environment as adequate and appropriate for their platform activities.
“This is something we absolutely were not expecting,” she stressed.
“I think we all know that fintechs and regulators have not always had the most loving relationship. But this really demonstrates progress and a lot of effort on both the public and the private sector side to bridge that gap,” she said.
Propson added that it is highly encouraging to see fintech performance remain strong after the 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,” she added. “Overcoming these challenges and realising 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,” she said.
According to the findings, AI is regarded as the most relevant topic for the development of the fintech industry in the next five years, as cited by 71% of respondents.
Embedded finance, the digital economy, and open banking were all nearly tied as the second most relevant factors (53%-54%) for surveyed fintechs.
Conversely, fintechs clearly cite a lack of incentives or mechanisms to contribute to environmental and inclusion goals.
A substantial 41% of fintechs emphasize the need for sustainable finance schemes and a further 31% cite the existing schemes as ineffective.
“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 personalised financial products and services.”
The report can be downloaded via: https://www.jbs.cam.ac.uk/faculty-research/centres/alternative-finance/publications/the-future-of-global-fintech-towards-resilient-and-inclusive-growth/
