In looking ahead at the near-term emergence of FinTech markets, the U.S. Department of Commerce’s International Trade Administration said in its “2016 Top Markets Report Financial Technology” that Asia will hold sway over other regions.
According to the report, China will be the biggest export market for payments next year; Japan will be the biggest exporter for FinTech overall. Though banks may be the juggernauts in the space at the moment, it is the FinTech upstarts that are expanding the size of the payments market in general and that are about to make a real dent in bank margins. The report stated that the online payments sector, with an emphasis on mobile payments, should be on the vanguard of that FinTech revolution.
“Payment services, with … 17.6 percent of the FinTech market share, have the highest adoption rate among FinTech products, followed by savings and investments at 16.7 percent, insurance services at 7.7 percent and online borrowing at 5.6 percent,” said the U.S. Department of Commerce in the report.
Trends that are taking shape include those in technology, where Big Data and marketplace funding, along with online interactions, are helping to disrupt the traditional marketplace, with currency innovations stretching across blockchain and bitcoin. Regulation is also giving a tailwind, said the report, and demographics skew toward younger and higher-income customers, relatively speaking.
The confluence of technology and demographics means that the transition to the cashless economy is afoot. The electronic payment adoption trend comes with attendant benefits, such as reduced corruption and inclusion of the unbanked.
Of those companies named in the report as being among the most innovative: Coinbase for digital currency and Klarna and Adyen for the payment sector.
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