US FinTech market has been largely driven by the technological developments such as data analytics, social networks and increased penetration of the smartphone which have led to the emergence of newer models such as marketplace funding, people based marketing and several others. Digital connectivity, faster payment options, lower customer acquisition costs through referrals on the social networks have all contributed to the growth and innovation in the FinTech in the US.
One of the important factors of the growth of the FinTech market in the US is the inclination towards FinTech investments. The FinTech investments in US rose from USD 1.6 billion in 2010 to USD 3.4 billion in 2013. 2014 and 2015 saw a dramatic rise in the investments front. In the year 2014, US investments almost tripled from USD 3.4 billion to around USD 9.9 billion. Whereas, investments grew even further in 2015. Highest proportion of investments was attracted by Payments sector followed by the lending space in 2015. The FinTech market has increased in terms of the transactional value from 2010 to 2015 at a CAGR of over 20% during 2010-2015.
Advanced payment security, faster checkout, loyalty rewards and customer ease have been the major factors driving the mobile wallets market in the country. However, Delay in adoption of the required infrastructure such as NFC terminal by retail merchants have prevented mobile wallets from achieving mainstream adoption. Dwolla, Venmo and Chase QuickPay were the pioneers in the space of P2P money transfers. P2P transfer systems have become increasingly prudent to the customers in the US due to absence of a common network for all financial institutions. Peer-to-peer payment apps have made it highly convenient for customer transfer money and their services usually are accompanied with very nominal charges or even free of cost.
During the past few years from 2010 to 2015, Robo Advisors, sub-segment of personal finance sector has grown stupendously. These firms leverage algorithms and client information to develop preset portfolio distribution and suggestions for investments particular to the individual clients. The advisors can be accessed via rich digital user interface and at very low fees. The robo advisors offer higher transparency as compared to the traditional investors and hence attract more investments. The traditional advisors such as Fidelity, Schwab and Vanguard would take the industry to new levels with exponential growth rates. It is also expected that other ETF leaders would also enter the market making it highly competitive with both services and cost playing a key role.
The business finance segment is the smallest segment in the transactional value in the US FinTech market. This includes business lending and equity crowd funding. Nonetheless, the mushrooming number of startups would provide momentum for growth of business lending platforms. While the equity crowdfunding segment would show slow growth as compared to other segments due to the growth of many other options for financing such as small business lending at low interest rates and easy process. Moreover the laws which cap the interest rates are not applicable to the business lending segment. Equity crowdfunding and sharing the profits thus by far seem less attractive as compared to the other alternative financing options. Above that, the equity crowd funding is even less attractive to the individual investors, since there is no surety of how much their investment would be worth, even in the proportionate basis with increasing investment rounds.
“Choosing the right location for the startup is of utmost importance to the entrepreneurs since the funding and growth opportunities also depend upon the region apart from other factors. Although in the world of borderless innovation, it is not much important factor. However, that is only the case for startups which have reached a particular level and has the required resources to go beyond the boundaries. Silicon valley, California and New York are some of the locations which could help nurture the growth and development of the startups.”, according to the Research Analyst, Ken Research.
The report titled “US FinTech Market Forecast to 2020 – Mobile Payments and Robo Advisors to Shape Future Growth” provides detailed overview on the FinTech Market in the US and helps readers to identify the ongoing trends in the industry and anticipated growth in future depending upon changing industry dynamics in coming years. The report is useful for investors, financial institutions, FinTech companies, startups, and other stakeholders to align their market centric strategies according to ongoing and expected trends in the future.
Topics Covered in the Report
US Financial Technology Market
US Fintech Market
US P2P Lending Market
US Mobile Wallet Market
Market Size Robo Advisors Market
Robo Advisors AUM US
Business Lending Market Future
Global Fintech Market
United States Fintech
Market Forecast Equity Crowd Funding
Pulse of Fintech
Fintech Companies United States
Challenges Fintech Market,
Financial Services FinTech Industry
Fintech Market Growth
Mobile Payments Market
Ankur Gupta, Head Marketing & Communications