AI in Fintech Market Expected to Reach $61.30 Billion by 2031

According to a new report published by Allied Market Research, titled, “AI in Fintech Market," The AI in Fintech market size was valued at $8.23 billion in 2021, and is estimated to reach $61.30 billion by 2031, growing at a CAGR of 22.5% from 2022 to 2031.

Companies in the financial sector are leveraging artificial intelligence to analyze and manage data from multiple sources to provide valuable insights. These innovative results help banks overcome the difficulties they face on an everyday basis while providing day-to-day services such as loan management or payment processing. Moreover, AI in FinTech powers many solutions aimed at enhancing security precautions. For instance, banks offer apps that can be accessed only with facial or fingerprint recognition. This is made possible due in large part to Artificial Intelligence.

Furthermore, some experts claim that passwords and usernames will be replaced by AI-backed security solutions in the near future. Speech recognition, face recognition, and other biometric data can add a supplementary security layer and are more difficult to bypass than traditional passwords. AI for fintech crypto has proven to be such a success in the FinTech sector as it provides a massive boost to security. AI in cyber security generally comes in the form of chat-bots that convert frequently asked questions into simulated conversations. In addition, they can reset forgotten passwords or grant additional access where necessary. Moreover, customer service is one of the most prominent areas of FinTech that has been improved by machine learning in fintech. The increasing sophistication of artificial intelligence has resulted in chatbots, virtual helpers, and artificial intelligence interfaces that can reliably interact with customers. The ability to answer basic queries offers massive potential in reducing front office and helpline costs.

The AI in FinTech industry is distinguished by its high degree of innovation within a complex ecosystem that includes, financial service providers, and start-ups. Furthermore in recent years, artificial intelligence (AI) has been adopted by various FinTechs for strategic decision making, customer insights, understanding consumer purchasing behavior, and improving the digital transaction experience. For instance, Government of India recently announced the rapid digitalization of the banking sector as part of the Digital India initiative that will stimulate financial inclusion. RBI further promoted its policy of Secure and Informed Digital Banking.

Moreover, Allied Digital Services Ltd, a publicly-traded global IT solutions, services and master systems integration company, officially announced the launch of its new FinTech product  'FinoAllied' which is an AI-Powered conversational banking platform, that comes with built-in banking services and transactions fully ready to be offered to the customers through various digital channels of the banks. Allied Digital sources claim that FinoAllied could be helpful for small and mid-size banks that are struggling in their digital transformation.

On the basis of component, the solution segment is the highest growing segment. This is attributed to the fact that most of the FinTechs have started adopting AI and advance machine learning algorithms to manage the massive volume of data being generated for meaningful insights and better-informed decisions. Moreover, companies majorly focus on creating novel opportunities for growth and revenue generation, thereby increasing the preference for AI and advance machine learning algorithms across FinTech industries.

Based on region, North America attained the highest growth in 2021 for the AI in FinTech market growth. This is attributed to the fact that the vast majority of financial advisors in North America believe that artificial intelligence (AI) will transform FinTech sector and help in driving the business growth. Furthermore, against increasingly challenging market conditions, AI has the potential to help FinTech sustain and drive new growth, by creating operating efficiencies and transforming the customer experience through more hyper-personalized insights and products.   

The COVID-19 pandemic had a positive impact on the AI in FinTech market trends, since most of the FinTech companies adopted technology as Artificial intelligence is helping FinTech companies since the onset of the COVID-19 economic crisis by making both credit repair and credit monitoring faster and more accurate. From process automation to using biometric identification to reduce credit fraud, AI is fueling improvements that deliver better results for consumers while also helping FinTech industry leaders operate more efficiently and profitably. Moreover, many FinTechs have experienced a surge in demand as working practices and customer banking habits changed during the COVID-19 era. The advent of AI based financial services, has created faster, more efficient and typically cheaper banking compared to traditional financial services. Thus, the COVID-19 had a positive impact on the AI in FinTech market.

Key Findings of the Study

• By application, the virtual assistant (chatbot) segment led the AI in FinTech market in terms of revenue in 2021.
• By deployment mode, the on-premises segment accounted for the highest AI in FinTech market share in 2021.
• By region, North America generated the highest revenue in 2021.

The key players profiled in the AI in FinTech market analysis are Amazon Web Services, Inc., Cisco Systems, Inc., ComplyAdvantage, Cognizant, Capgemini, FICO, Google, Hewlett Packard Enterprise Development LP, HCL Technologies Limited, IBM, Intel Corporation, Inbenta Holdings Inc., Microsoft, Oracle, Saleforce, Inc., SAP SE, and TIBCO Software, Inc. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.