United States Fintech Market Witnessing Growth Spurts: Forecast to Grow at a CAGR of 10.1% by 2027

The Fintech market in the United States is growing rapidly. Finance technology has revolutionized the US financial sector and the way Americans engage with money, whether they wish to borrow, invest, purchase insurance, or finance start-ups. Read on to discover the factors that drive the US Fintech market

A recent study conducted by the strategic consulting and market research firmReport Ocean, revealed that the United States fintech market is estimated to grow at a CAGR of 10.1% during the forecast period of 2021-2027. Fintech is growing at a high rate in the United States due to changing business models and the increasing emphasis on boosting customer interaction to boost revenue. Additionally, the increasing digitization of businesses and growing investment in fintech companies offer lucrative growth opportunities to the market. Furthermore, structured government regulations regarding digital payment methods, banking, and credits are also anticipated to drive the growth of the United States Fintech market in the forecast period. However, high risks associated with data privacy and cybersecurity in the fintech platforms may act as a major restraint.

Growth of the E-Commerce Industry is Propelling the United States Fintech Market

With the growth of the e-commerce industry, the fintech market in the United States is also benefiting from significant growth opportunities. Financial technology continuously supports and improves online payment systems that ensure higher levels of security. There are many fintech companies, such as PayPal, Stripe, TransferWise, Venmo, etc., that offer digital payment services both to businesses and to consumers. As more and more Americans rely on e-commerce platforms for acquiring daily-use products, especially after the COVID-19 pandemic, the digitization of their daily lives is contributing to the growth of the fintech market.

Increasing Number of Fintech Startups is Driving the United States Fintech Market

The fintech market in the United States is booming with startups in various sectors such as banking, healthcare, education, etc. With the increasing number of startups, consumers will have access to a wide variety of services and platforms. Fintech startup Brex, for example, offers corporate cards for credit lines and corporate lab expenses. Another platform called Varo acts as a digital bank for individuals, offering financial services, including savings accounts, money transfers, cash withdrawals, etc. Thus, with the growing number of startups, the United States fintech market is also set to grow.

United States Fintech Market - By Deployment

Based on deployment, the United States fintech market is segmented into cloud and on-premise. The cloud segment accounts for the largest market share as it allows businesses to store and manage data remotely and with higher security. It also provides opportunities to small and medium-sized businesses for expansion while eliminating the need to establish physical hardware setup for services. Moreover, cloud service companies like Amazon Web Services, Alibaba Cloud, etc., are also giving the cloud segment significant opportunities in the United States market.

Impact of COVID-19 on United States Fintech Market

The United States fintech market witnessed a tremendous boom after the emergence and spread of the COVID-19 pandemic in the country. As physical stores and the distribution of products were restricted, it resulted in a significant increase in e-commerce sales and the use of digital payment platforms during the period. Moreover, fintech platforms provided assistance and resilience to small and medium-sized businesses by supporting their adoption of remote working scenarios and their move toward digital financial services during the global health crisis. Last but not least, Fintech companies also provided lenders and borrowers with platforms for short-term loans and financial assistance to keep up their business during such difficult times.

United States Fintech Market - Competitive Landscape

The leading players in the United States fintech market are Stripe, Klarna, Kraken, Chime, Plaid, Robinhood, Brex, Carta, Three-way tie, Square Inc., and other prominent players.

The market is highly consolidated among industry giants such as Chime, Plaid, Brex, etc. Stripe, which is primarily a payment processing software and application, holds a dominant share of the market. The market players invest heavily in expanding their fintech services beyond payment and insurance and are targeting emerging areas, including blockchain and cryptocurrency, digital lending and credit, etc. Additionally, the number of fintech startups such as Clyde, Digit, MANTL, etc., are emerging with great potential and giving tough competition to established players. Furthermore, the adoption of competitive strategies such as partnerships, mergers, acquisitions, collaborations, etc., is also prominent in this market.