AI in Fintech Market to Reach $22.6 Billion by 2025, but Most Fintechs Still Prefer In-House Over Buying AI Software from Third Parties
The global AI in Fintech market was valued at about $6.67 billion last year and is now projected to reach $22.6 billion by 2025.
As noted in ResearchAndMarket’s recent report, the AI Fintech sector is on track to expand at a CAGR of 23.37% from 2020-2025.
As mentioned in the report:
“AI improves results by applying methods derived from the aspects of human intelligence but beyond human scale. The computational arms race since the past few years has revolutionized the Fintech companies. Further, data and the near-endless amounts of information are transforming AI to unprecedented levels where smart contracts will merely continue the market trend.”
As noted in the report, the global demand for process automation among financial services providers is expected to drive the growth of the AI Fintech sector. Process automation is evolving into cognitive process automation, which allows artificial intelligence systems to perform increasingly complex automation processes, the report noted.
Additionally, industry participants have been launching machine learning (ML)-enabled fraud detection software solutions due to increased demand for these services.
Last month, GBG, a company specializing in compliance and fraud management, confirmed that it was expanding its AI and ML capabilities for its payments and transaction monitoring software, Predator – which will make deep learning and predictive analytics accessible to its clients.
The report also mentioned:
“The increasing availability of data sources is driving the [AI in Fintech] market…. Fintech firms and startups have broadened their horizons to cater to a diverse range of segments. The financial sector expanded [into] … personal financial management, personal banking, consumer and business loans, investments, financial advisory, and various other data sources.”
Nearly a third, or 33%, of Fintechs are now using AI solutions that they’ve developed in-house, a Finrail survey from last year revealed.
Interestingly, many Fintechs decided to use the built, instead of buy, option because their requirements weren’t effectively addressed, however, this may change due to innovations in Regtech, the report stated.
While highlighting major trends in Fintech, the report pointed out:
“Asset management companies can gain substantial benefits through the adoption of AI and ML. These technologies can help provide real-time actionable insights and facilitate portfolio management decisions. Subsets of AI can empower asset managers to streamline processes to optimize investment decisions and processes.”
As reported recently, the global Fintech market is projected to reach $300 billion market cap by 2025 due to large investments in new tech and infrastructure.