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Fintech as a Service (FaaS) Market Size, Share Global Analysis Report, 2024 – 2032
Fintech as a Service (FaaS) Market Size, Share, Growth Analysis Report By Type (Banking, Lending, Payment, and Others), By Technology (Blockchain, Artificial Intelligence [AI], Robotic Process Automation [RPA], Application Programming Interface [API], and Others), By Application (KYC Verification, Fraud Monitoring, Compliance and Regulatory Support, and Others), By End-User (Banks, Financial Institutions, Insurance Companies, and Others), And By Region - Global Industry Insights, Overview, Comprehensive Analysis, Trends, Statistical Research, Market Intelligence, Historical Data and Forecast 2024 – 2032
Industry Insights
[225+ Pages Report] According to Facts & Factors, the global fintech as a service (FaaS) market size was around USD 318.05 billion in 2023 and is predicted to grow to around USD 1465.43 billion by 2032, with a compound annual growth rate (CAGR) of roughly 18.5% between 2024 and 2032.
Market Overview
Fintech as a service is a business model that offers companies finance technology services via APIs. It allows them to provide services without building complicated systems from the beginning. FaaS platforms enable businesses to incorporate features like lending, payments, banking, insurance, etc., into their present infrastructure cost-effectively and quickly. The global fintech as a service (FaaS) market is witnessing remarkable growth due to digital transformation in finance, cost-efficiency, scalability & speed. The rising demand from companies to use digital tools to improve operational efficacy and customer experience is among the leading drivers. Businesses and financial institutions are shifting to these services to enhance competitiveness and simplify their services. With FaaS, companies can prevent costly maintenance and build in-house systems. Companies will only pay for their subscribed services, thus lowering their development and operational costs. These platforms also offer scalability, allowing companies to expand their offerings. The main benefit is integrating novel financial services and scaling up, mainly for SMEs and startups.
However, security and data privacy issues and lack of standardization could hamper the global market. Data security and privacy are the key restraining factors since financial services comprise sensitive and confidential data. Moreover, using third-party data increases security concerns. Furthermore, there is no global standard for financial services, and diverse providers may offer unique services and functionalities. This inconsistency of standards may complicate incorporating FaaS services for companies, mainly in regions with different regulatory scenarios. Yet, the market is opportune to benefitting factors, such as the rise of digital wallets and the integration of cryptocurrency and blockchain. The growth of digital banks and the rising prominence of digital wallets offer abundant opportunities for Fintech as a service (FaaS) platform. Also, there is an opportunity for these platforms to provide blockchain-enabled financial services as cryptocurrency and blockchain experience more popularity. This could positively impact the global market growth.
Key Insights:
- As per the analysis shared by our research analyst, the global fintech as a service (FaaS) market is estimated to grow annually at a CAGR of around 18.5% over the forecast period (2024-2032)
- In terms of revenue, the global fintech as a service (FaaS) market size was valued at around USD 318.05 billion in 2023 and is projected to reach USD 1465.43 billion by 2032.
- The fintech as a service (FaaS) market is projected to grow significantly due to mobile and digital banking, digital transformation in the finance sector, and cost-efficiency benefits to businesses.
- Based on type, the payment segment is expected to lead the market, while the lending segment is expected to register considerable growth.
- Based on technology, the Application Programming Interface (API) segment dominates, while the Artificial Intelligence (AI) segment is projected to witness sizeable revenue over the forecast period.
- Based on application, the KYC verification segment is the leading segment, while the fraud monitoring segment is projected to witness a notable share over the forecast period.
- Based on end-user, the financial institutions segment is expected to lead the market compared to the insurance companies segment.
- Based on region, North America is projected to dominate the global market during the estimated period, followed by Asia Pacific.
Growth Drivers
- Scalability and cost efficiency drive the fintech as a service (FaaS) market growth
One of the key attractions of the FaaS platforms is the potential to scale finance services without requiring upfront capital to build the financial services from the beginning. Companies can easily access a broader range of finance technologies on requirement and scale as desired, allowing cost-efficient operations. As businesses, mainly small and medium enterprises, look for cost-efficient ways to access these services and develop their digital tools, FaaS progresses as an appealing option owing to its scalability. This helps businesses to grow without the stress of infrastructural complexity.
One of the leading payment providers, Stripe, expanded its product line by launching Stripe Issuing and Stripe Treasury. This enables companies to build their financial products at low prices while preventing the lifting of creating internal systems.
- The growth of embedded finance fuels market progress
Embedded finance incorporates financial services straight into non-financial platforms like mobile apps, e-commerce websites, and rail-hailing services. FaaS is vital in providing APIs that enable companies to integrate lending, payments, insurance, and other products smoothly into their current systems. As more businesses welcome embedded finance, FaaS offers companies the infrastructure to incorporate such products without needing investments in enhancing the essential technology.
Strip and Shopify have joined hands to offer payment solutions for merchants through their platform. This allows companies to accept global payments and access other options via the platform. This shift is a key component of the embedded finance trend.
Restraints
- Complexity and technical integration limit the progress of the fintech as a service (FaaS) market
Incorporating FaaS platforms in the current infrastructure might be complex, particularly for the former systems. While FaaS platforms are designed in a way that can be easily installed, businesses still face challenges owing to the intricacy of their current financial systems, third-party applications, or databases. These challenges may lead to higher costs, possible disturbances, and long implementation timelines, thus adversely impacting the FinTech as a service (FaaS) market.
Lately, 63% of financial institutions reported barriers in integrating novel fintech solutions with their former systems.
HSBC experienced challenges with technical integration in 2023 while adopting blockchain-enabled FaaS solutions for foreign payments. The incorporation of their former systems resulted in a delay in installation, denoting that traditional financial institutions face challenges with integrating improved digital systems in their infrastructure.
Opportunities
- Growth of neo-banking and digital banking to contribute to the fintech as a service (FaaS) market growth
Neo-banking, or digital banking, refers to online banks without physical offices. The growth of digital banking is fueling the use of FaaS as these banks use external service providers to offer products like loans, savings accounts, and payment services in the digital environment. FaaS allows neo-banks to offer exhaustive financial services swiftly without lesser operational overheads.
Chime, a leading U.S. neo-bank associated with Visa, will grow its offerings of embedded payment systems, underlining the rising role of FaaS in the digital banking domain.
Challenges
- Intense competition to restrict the growth of the fintech as a service (FaaS) market
Today, the fintech as a service (FaaS) market is crowded with multiple players offering comparable financial products like lending, payments, and insurance solutions. Large technology giants like Google, Amazon, and Apple have opened their financial services domain, thus strengthening elevated competition for small providers and startups. This strong competition leads to innovation races and price wars, which may challenge small companies to differentiate their offerings.
Apple Pay has recently expanded, and Apple has gotten close to its financial services network. They started offering digital wallets to payment processing and credit card services. This competition from technology companies pressurizes SMEs and FaaS providers to distinguish their offerings and maintain a strategic edge.
Report Scope
Report Attribute |
Details |
Market Size in 2022 |
USD 318.05 Billion |
Projected Market Size in 2030 |
USD 1,465.43 Billion |
CAGR Growth Rate |
18.5% CAGR |
Base Year |
2022 |
Forecast Years |
2023-2030 |
Key Market Players |
Plaid, Stripe, Square, Adyen, Marqeta, Lemonade, Onfido, Jumio, Kabbage, Revolut, Braintree, TrueLayer, Kiva, Mambu, Benevolent, and others. |
Key Segment |
By Type, By Technology, By Application, By End-User, and Region |
Major Regions Covered |
North America, Europe, Asia Pacific, Latin America, and the Middle East &, Africa |
Purchase Options |
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Segmentation Analysis
The global fintech as a service (FaaS) market is segmented based on type, technology, application, end-user, and region.
Based on technology, the global fintech as a service (FaaS) industry is divided into blockchain, Artificial Intelligence (AI), Robotic Process Automation (RPA), Application Programming Interface (API), and others. In 2023, the Application Programming Interface (API) segment registered a notable share of the Fintech as a Service (FaaS) market owing to their smooth integration among diverse fintech services. This allows third-party developers and financial institutions to offer and build financial products. APIs also support digital payments, open banking, and embedded finance, increasing their significance for FaaS platforms to offer customers flexible, scalable, and customizable solutions.
Based on application, the global fintech as a service (FaaS) industry is segmented as KYC verification, fraud monitoring, compliance and regulatory support, and others. The KYC verification segment is projected to witness substantial growth over the forecast period, owing to the growing need for financial institutes to obey regulations that prevent illegal activities. With the development of digital banking, lending, and payments, there is a need for automated and unified KYC verification procedures. FaaS providers use improved technologies to simplify the procedure. Nearly 85% of global financial institutions are increasing spending on AML and KYC technologies to reduce the risk of fraud and to comply with regulatory requirements.
Based on end-user, the global market is segmented as banks, financial institutions, insurance companies, and others. The financial institutions segment is anticipated to lead the market over the estimated period. Financial institutions like credit unions, traditional banks, and investment companies are the leading consumers of FaaS services. They are dependent on FaaS platforms for a broader range of services.
With the present digital transformation in the finance industry, these institutions are actively adopting digital banking services, KYC/AML services, and API integrations to improve customer experience, operational efficiency, and regulatory compliance.
Regional Analysis
- North America to witness significant growth over the forecast period
North America registered a substantial share of the global fintech as a service (FaaS) industry in 2023 and is projected to continue its dominance over the forecast years. The key reasons for the growth include strong technological infrastructure, growing demand for financial services, venture capital, and strong investments. North America is leading due to the presence of most technology companies and has a well-developed network for innovation in fintech. The presence of giants like Microsoft Azure, Amazon Web Services, Google Cloud, and more has streamlined the building and scaling of services for businesses with the help of cloud-based infrastructure. The region also holds increased adoption of payments, digital banking, and lending services, thus contributing to the vast FaaS market. Also, the United States, among others, is the home of Fintech venture capital. Investors are excited to support innovative FinTech businesses and providers of FaaS, thus resulting in growth opportunities and significant funding for the domain.
Asia Pacific is projected to progress as the second-leading region in the fintech as a service industry, owing to the growing digital adoption, government backing, and significant investment flow. The APAC nations are witnessing speedy digital transformation and a rise in smartphone usage, mainly in emerging economies, enabling fintech solutions to scale and expand consumer base quickly. Governments in the leading economies are launching regulations and sandbox programs that comply with fintech innovation, simplifying FaaS businesses to grow and operate. Other leading economies like Singapore, China, and India have firm venture capital investments in fintech, fueling the growth of fintech as a service company in domains like lending, payments, and wealth management.
Competitive Analysis
The global fintech as a service (FaaS) market is led by players like:
- Plaid
- Stripe
- Square
- Adyen
- Marqeta
- Lemonade
- Onfido
- Jumio
- Kabbage
- Revolut
- Braintree
- TrueLayer
- Kiva
- Mambu
- Benevolent
Key Market Trends
- Growth of embedded finance:
Embedded finance incorporates financial services, such as lending, payments, and insurance, into non-finance platforms, for instance, retail and e-commerce applications. Businesses are actively using fintech as a service (FaaS) solution to provide smooth financial products in their present services.
- Emphasis on financial inclusion:
Fintech as a service (FaaS) is vital in sponsoring inclusion by offering access to financial services for underserved areas, mainly in developing markets. FaaS helps reach underbanked and unbanked individuals through digital and mobile platforms.
The global fintech as a service (FaaS) market is segmented as follows:
By Type Segment Analysis
- Banking
- Lending
- Payment
- Others
By Technology Segment Analysis
- Blockchain
- Artificial Intelligence (AI)
- Robotic Process Automation (RPA)
- Application Programming Interface (API)
- Others
By Application Segment Analysis
- KYC Verification
- Fraud Monitoring
- Compliance and Regulatory Support
- Others
By End-User Segment Analysis
- Banks
- Financial Institutions
- Insurance Companies
- Others
By Regional Segment Analysis
- North America
- The U.S.
- Canada
- Mexico
- Europe
- France
- The UK
- Spain
- Germany
- Italy
- Rest of Europe
- Asia Pacific
- China
- Japan
- India
- Australia
- Southeast Asia
- Rest of Asia Pacific
- The Middle East & Africa
- Saudi Arabia
- UAE
- Egypt
- Kuwait
- South Africa
- Rest of the Middle East & Africa
- Latin America
- Brazil
- Argentina
- Rest of Latin America
Table of Content
Industry Major Market Players
- Plaid
- Stripe
- Square
- Adyen
- Marqeta
- Lemonade
- Onfido
- Jumio
- Kabbage
- Revolut
- Braintree
- TrueLayer
- Kiva
- Mambu
- Benevolent
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