The rising focus on new technological advancements, growing demand for automated solutions for financial organizations, surging number of internet users, and growing fintech adaption rate around the world are fueling the global AI in fintech market. The market is expected to generate $46,881.9 million revenue by 2030, advancing at a CAGR of 19.8% during 2020–2030.
The COVID-19 pandemic negatively impacted the AI in fintech market in 2020, as the banking and financial sectors were affected. Moreover, in the first two quarters of 2020, due to cash crunch and unsuitable scenarios, many banks and financial institutions reduced their expenditure on AI and other technological advancement initiatives. However, from the last quarter of 2020, it has been witnessed that the importance of AI, machine learning (ML), and data science increased and is further expected to continue during the forecast period. Also, AI solutions assist banks in increasing revenue, lowering costs, and uncovering previously unknown opportunities.
On the basis of component, the AI in fintech market is categorized into solutions and services. Between the two, the solutions category generated a larger revenue in 2020, and it is projected to grow at a higher pace during the forecast period. Due to faster data processing and less manual work, AI solutions help financial institutions to create a better, more engaging financial environment with a high customer experience.
In terms of application, the market for AI in fintech is classified into credit scoring, fraud detection, chatbots, quantitative and asset management, and others. Among these, the quantitative and asset management category is expected to grow at the highest CAGR during the forecast period. This can be mainly due to the fact that AI is changing the asset management sector by allowing fundamental analysts to conduct a large number of researches and extract more information quickly, allowing them to discover accurate investing ideas.
In 2020, North America region was the largest revenue contributor to the AI in fintech market. This is mainly attributed to the developed IT infrastructure, high investment, penetration of 5G technology, and high fintech adaption rate in the region. Moreover, recognizing the strategic relevance of AI for the future economy and security of the U.S., the government launched the American AI Initiative in February 2019 under Executive Order 13859. This project targeted five critical lines of effort: expanding AI research spending, unleashing Federal AI computer and data capabilities, establishing AI technical standards, developing AI workforce, with international allies.
Players in the AI in fintech market have been involved in collaborations and partnerships to remain competitive. For instance, in July 2021, IBM Corporation and SAP SE announced their partnership, in which SAP SE would onboard two of its finance and data management products to IBM Cloud for Financial Services, to accelerate IBM cloud adoption in the financial services industry. The collaboration would gear to assist the companies in meeting the industry's high compliance, security, and resiliency standards, as well as supporting financial services institutions' business transformation and innovation.
Some of the major players operating in the global AI in fintech industry are Amazon Web Services Inc., Intel Corporation, Microsoft Corporation, Oracle Corporation, IBM Corporation, Google LLC, HCL Technologies Limited, salesforce.com, SAS Institute Inc., Cognizant Technology Solutions Corporation, Capgemini SE, and IPsoft Incorporated.