Fintech-as-a-Service Market

Fintech-as-a-Service Market Outlook (2024 to 2034)

Expanding at a CAGR of 16%, the global fintech-as-a-service (FaaS) market is projected to increase from a value of US$ 363.3 billion in 2024 to US$ 1,602.7 billion by the end of 2034.

Fintech-as-a-Service (FaaS) consolidates all financial management, payment, and money movement services that modern businesses need to build effective applications through a single, global, scalable API. FaaS solutions include white-label e-wallet platforms, card issuing, payment acceptance, pay-outs and remittances, identity verification, fraud prevention, virtual accounts, and merchant services, as well as solutions for provisioning, managing, and reporting.

FaaS streamlines infrastructure building, system integration, and regulatory compliance through third-party assistance. This enables businesses to swiftly offer diverse financial services, previously exclusive to traditional banking institutions, to customers.

Based on technology, artificial intelligence-based services are gaining traction in the development of fund transfer platforms. It provides automation and augments the safety of consumers’ funds in their bank accounts. Regions such as APAC & North America hold a major chunk of the fintech-as-a-service market, backed by the hefty investment made by prominent players in the research & development of innovations to enhance their functionality.

Report Attributes	Details
Fintech-as-a-Service Market Size (2024E)	US$ 363.3 Billion
Projected Market Value (2034F)	US$ 1,602.7 Billion
Global Market Growth Rate (2024 to 2034)	16% CAGR
China Market Value (2034F)	US$ 175.9 Billion
Canada Market Growth Rate (2024 to 2034)	16.5% CAGR
North America Market Share (2024E)	23.9%
East Asia Market Value (2034F)	US$ 370.2 Billion
Key Companies Profiled	PayPal Holdings Inc. Block Inc. Mastercard Incorporated Envestnet Inc. Braintree Upstart Holdings Inc. Solid Financial Technologies Inc. Railsbank Technology Ltd.

Which Factors are Supporting Expansion of the Fintech-as-a-Service Market Size?

“Vast Online Transaction Volumes and Rising Venture Capital Investments into Fintech Companies”

The adoption of advanced technologies worldwide such as blockchain technology, open banking, cloud & big data analytics, voice bots, and digital payments is projected to drive the FaaS market growth. Banks and financial institutions are looking for ways to implement technological advancements in their offerings. These technological advancements have made it possible to invest, borrow, transfer, and save funds virtually. Technological advancements in the fintech sector are projected to drive the growth of the fintech-as-a-service market.

Fintech companies are continuously working on advancing traditional methods due to which they are increasingly receiving funding from venture capitalists. These investments are made to foster multiple benefits offered by the companies such as lowering service costs, increasing processing time, swift blockchain penetration, and automated banking systems.

Multiple government entities around the world are constantly encouraging companies that provide digital financial services to enhance their offerings.

• For example, in 2022, USAID launched a new finance program Digital Invest, which is aimed at utilizing private capital for internet service providers (ISPs) and digital finance to serve traditionally excluded consumer populations worldwide.

Which Factors are Restricting Fintech-as-a-Service Market Growth to Some Extent?

“Concerns about Cyberattacks and Regulatory Complexity”

Regulatory challenges are a significant hurdle, as fintech companies must navigate complex laws and regulations that vary by country and sometimes even within regions in the same country. Cybersecurity concerns also pose a significant barrier, as financial services are a prime target for hackers and data breaches are expected to have severe consequences. Technological integration issues can also hinder growth, as integrating new fintech solutions with existing systems can be complex and time-consuming. Lack of consumer trust in new and unproven fintech companies can slow adoption rates.

High cost of innovation and the risk of failure can also deter some companies from fully embracing fintech solutions. With the increased digitalization of these financial services, consumers are concerned about their security and privacy. However, an improved UI experience embedded with better data security and privacy among the users is anticipated to create opportunities for the growth of the market. The inability to adapt to the changing technology among elderly users is also expected to hinder the growth of the market.

Country-wise Insights

Fact.MR, a market research and competitive intelligence provider, asserts through its newly published analysis that North America is projected to hold 24.3% fintech-as-a-service market share by 2034. Fintech-as-a-service providers have expanded their operations to different locations such as Southeast Asia, Central and South America, and Australia. This approach to growth allows them to effectively respond to rising global demand.

What are the Factors Influencing Market Performance in the United States?

“Increased Digitalization of Financial Services and Shift toward Online and Mobile Banking”

Attribute	United States
Market Value (2024E)	US$ 38.6 Billion
Growth Rate (2024 to 2034)	16.5% CAGR
Projected Value (2034F)	US$ 177.6 Billion

Fintech-as-a-service market trends in the United States include the rapid digitalization of financial services and the shift towards online and mobile banking. The proliferation of e-commerce platforms and the need for seamless, integrated payment solutions have also driven the growth of the market. The favorable regulatory environment in the United States and advancements in technology such as blockchain and artificial intelligence are benefitting market players in the nation to a great extent. Concerns around data security and privacy are major challenges that solution providers are striving to address.

Which Key Factors Make China Lead the Market in East Asia?

“Supportive Regulatory Environment Promoting Digitalization of Financial Services”

Attribute	China
Market Value (2024E)	US$ 39.8 Billion
Growth Rate (2024 to 2034)	16% CAGR
Projected Value (2034F)	US$ 175.9 Billion

Supportive regulatory environment in China and the release of the Fintech Development Plan for 2022 to 2025 have played a significant role in fueling the expansion of the fintech-as-a-service market in the country. This plan calls for regulated and inclusive fintech expansion. A high level of technological proficiency among Chinese consumers has fueled the expansion of the fintech industry. Underdeveloped banking systems in China have created a demand for fintech solutions. China's improving scientific and technological prowess has also contributed to its dominance in East Asia.

Category-wise Insights

The FaaS market is divided into three segments, namely payment, funds transfer, and loan. Out of these three segments, the payment segment is estimated to account for a leading share of the market in 2024.

How are Technological Advancements Driving Payments and Fund Transfers?

“Rising Adoption of AI and APIs into Mobile-Based Payments Enhancing Convenience”

Attribute	Payment
Segment Value (2024E)	US$ 167.1 Billion
Growth Rate (2024 to 2034)	15.5% CAGR
Projected Value (2034F)	US$ 705.2 Billion

The payment segment will capture a dominant market share of 46% in 2024. The growing incorporation of AI technology and APIs into mobile-based payment services for traditional banking is predicted to propel the growth of the segment. Pioneering efforts are being made by several tech giants to improve their respective products. This also bodes well for the growth of the segment.

The fund transfer segment is projected to exhibit significant growth from 2024 to 2034. Fund transfer is primarily associated with transferring and receiving money using technology-based payment systems. The growing adoption of fund transfer apps worldwide is projected to boost the demand for banking services, thereby driving the growth of the segment. Efforts are underway by various fintech companies globally to develop fund transfer apps with modern user interfaces that ensure an enhanced customer experience.

What is Encouraging Extensive Adoption of FaaS in Banking?

“Favorable Regulations Governing Fintech and Demand for Personalized Banking Services”

Attribute	Banks
Segment Value (2024E)	US$ 152.6 Billion
Growth Rate (2024 to 2034)	14.8% CAGR
Projected Value (2034F)	US$ 609 Billion

Increased digitalization of financial services is enabling banks to offer more efficient services and timely solutions to their customers, thus enhancing convenience. Evolving customer preferences are also playing a vital role in fueling market growth, given that demand for seamless, integrated, and personalized financial services is rising considerably. Technological innovations such as artificial intelligence and blockchain are assisting banks in offering improved services and enhancing customers’ banking experience.

The market is benefitting from the implementation of favorable regulations as they create a more conducive environment for the adoption of fintech solutions. The introduction of banking-as-a-service (BaaS) models is promoting collaboration between banks and fintech companies. This allows both parties to leverage each other's strengths to deliver innovative financial services. Challenges such as data security and privacy concerns need to be addressed efficiently, as this is crucial for the augmentation of FaaS adoption in banks.

Competitive Landscape

Key players in the fintech-as-a-service industry are PayPal Holdings Inc., Block Inc., Mastercard Incorporated, Envestnet Inc., Braintree, Upstart Holdings Inc., Solid Financial Technologies Inc., and Railsbank Technology Ltd.

• In 2023, Fiserv and Equifax announced their alliance. Fiserv and Equifax jointly launch commercial products that use new analytics to improve corporate authentication, accelerate account acquisition, and improve risk assessment.
• In 2023, Mastercard bought Baffin Bay Networks. This strategic acquisition helps Mastercard to improve its capabilities to assist businesses in dealing with the ever-changing threat landscape of cyberattacks.

Key Segments of Fintech-as-a-Service Market Research

• By Type :

  • Payment
  • Funds Transfer
  • Loans

• By Technology :

  • API-Based
  • AI-Based
  • RPA-Based
  • Blockchain-Based

• By Application :

  • KYC Verification
  • Fraud Monitoring
  • Compliance & Regulatory Support

• By End Use :

  • Banks
  • Financial Lending Companies
  • Insurance

• By Region :

  • North America
  • Latin America
  • Europe
  • East Asia
  • South Asia & Oceania
  • Middle East & Africa