Fintech Is Booming, with Opportunities for Expansion into the US
The fintech industry, which is short for financial technology, is booming around the world. This has created new opportunities for fintech companies to enter the US market.
People are using fintech now for a variety of financial needs, including making payments, saving, investing, budgeting, getting loans, paying off debt, banking, filing taxes, paying bills, sending money to others, insurance, checking their credit score, and cryptocurrency.
Global fintech funding reached a record $132 billion in 2021, more than double its level in 2020, according to CB Insights. 21 percent of all venture capital funding went to fintech. There are now 235 total fintech unicorns, or private fintech companies worth more than $1 billion, around the world.
In the fourth quarter of 2021, the US led the world in fintech funding, followed by Asia, Europe, and Latin America, in that order, according to CB Insights. Asia and Europe’s share of global fintech funding rose in the fourth quarter of 2021. Asia has 48 fintech unicorns, Europe has 42, and Latin America has 14.
Top global fintech unicorns include Klarna, a payments company based in Sweden; checkout.com, a payments platform based in London; N26, a digital bank based in Germany; Razorpay, a payments platform based in India; Toss, a money management and transfer platform based in South Korea; Trade Republic, an investment platform based in Germany; and C6 Bank, a digital bank based in Brazil. Other large fintech companies include Ant Group in China, Tencent in China, and Nubank in Brazil.
This is a good time for global fintech companies to enter the US. Americans have become more accustomed to making payments, managing their money, and sending money online. The US is also a large market, with a population of 332 million people and the largest economy in the world.
Fintech adoption is growing rapidly, and the pandemic accelerated it. More people are using fintech now partly because the pandemic has made it more difficult to manage their finances in person, particularly by visiting bank branches.
88 percent of US consumers used fintech in 2021, up from 58 percent the previous year, according to a report by Plaid. 48 percent of US consumers use fintech apps daily, up from 37 percent before the pandemic. Fintech use is not just limited to the young. 36 percent of Baby Boomers use fintech apps daily, according to the Plaid report.
A paper by researchers at the University of Zurich found that the pandemic led to a “sizable increase” in fintech app downloads. 49 percent of millennials adopted new digital buying methods like curbside pickup or using delivery apps during the pandemic, according to Silicon Valley Bank. In addition, 65 percent of Americans use mobile banking. A survey by Blumberg Capital found that the pandemic substantially reduced the cash use of 50 percent of US respondents. And 6 percent of US financial decision-makers started using fintech during the pandemic, according to McKinsey.
If you’re building a global fintech company, this is a great time to expand into the US. At Alariss Global, we match top US sales and business development talent with global tech companies. If you’re ready for your business to expand into the US, book a call with us today.