As the World Economic Forum (WEF) in Davos once again took center stage for global economic discussions, Bryan Zhang, executive director, and co-founder of the Cambridge Centre for Alternative Finance presented groundbreaking research on the future of global fintech. Conducted in collaboration with the WEF, the study explored key areas shaping the fintech landscape, offering insights into the industry’s demographics, market performance, and growth factors. The research, officially launched at a press conference during the WEF’s Annual Meeting, sheds light on the resilience and inclusivity required for the evolving fintech sector.
Key Findings from the WEF and Cambridge Centre for Alternative Finance:
The comprehensive study gathered data from 227 fintechs across five industry verticals and six regions. The examined verticals included digital lending, digital capital raising, digital payments, digital banking & savings, and insurtech. Regions covered in the study were Asia-Pacific, Europe, Latin America and the Caribbean, the Middle East & North Africa, US and Canada, and Sub-Saharan Africa.
- AI at the Forefront: According to the research, artificial intelligence (AI) emerges as the most relevant topic for the development of fintech in the next five years, with 70% of respondents expressing its importance.
- Tied for Second: Embedded finance, the digital economy, and open banking closely follow AI, with each factor considered almost equally relevant at 53%-54%.
- Environmental and Inclusion Goals: Fintechs identify a lack of incentives or mechanisms to contribute to environmental and inclusion goals. The study indicates that 41% emphasize the need for sustainable finance schemes, with an additional 31% citing existing schemes as ineffective.
- Consumer Demand Driving Growth: The research reveals that 51% of fintech firms cite consumer demand as the main growth driver. However, regional variations are notable, with Latin American and Caribbean fintechs placing a higher emphasis on consumer demand (nearly 70%).
- Challenges and Hindrances: Macroeconomic factors are cited by 56% as the top hindrance to growth, with funding environment differences noted across regions. While Sub-Saharan Africa sees its funding environment as conducive for growth, the Latin American and Caribbean region reports a drop in funding and perceives it as a hindering factor.
- Digital Regulatory Infrastructure: A majority (55%) find the development of digital regulatory and supervisory infrastructures effective in supporting growth, underlining the importance of a robust regulatory environment for fintech development.
- Inclusive Access to Financial Services: Fintech growth is driving financial services and products into underserved segments, including female (39%), low-income (40%), and rural or remote (27%) customers. Regional differences in the proportion of female transaction values underscore the impact of fintech on diverse demographics.
The collaborative research by the WEF and the Cambridge Centre for Alternative Finance provides a comprehensive snapshot of the current state and future trajectory of the global fintech landscape. As the fintech industry continues to evolve, these findings underscore the need for ongoing regulatory innovation and committed support from public and private sector actors to realize sustained social and economic benefits from this dynamic sector.