Revenues from Fintech are expected to increase from $150 billion in 2018 to $500 billion by 2030 at an average annual growth rate that’s about 3x faster than the larger financial industry’s projected revenue growth, according to a recent report from UBS.
The report notes that the booming Fintech sector is expecting consistent double-digit earnings growth (per year) for the next 8 years. According to UBS’ analysis, Fintech is well-positioned to be among the world’s fastest-growing sectors, internationally.
Key Fintech growth areas include digital payments, online lending, insurance technology (Insurtech), Wealthtech, and capital markets technology.
The report reveals that blockchain or distributed ledger technology (DLT) and artificial intelligence (AI) will bring opportunities and will also challenge existing financial service providers and traditional business models.
UBS’ report projected that blockchain tech or DLT would generate $300-$400 billion in yearly economic value, internationally, by 2027. The distributed ledger will be widely adopted across six main sectors, including financial services, manufacturing, healthcare, public services, utilities, and the sharing economy, the report predicts.
The bank said that blockchain will help the financial industry in processes involving disintermediation and automation. This will lead to greater efficiency and cost-savings for companies across the globe.
Blockchains will enhance existing post-trade services, compliance processes, trade finance, foreign exchange (FX) transfers, insurance claims, and will enable greater financial inclusion by supporting digital currency transactions.
Artificial intelligence will significantly improve traditional business processes, the report claims. It noted that AI would help companies offer helpful virtual assistants, chatbots and develop sophisticated speech recognition software – which would work for everyday or typical customer interactions.
AI will also help automate wealth management advice (Robo-advisors) and enhance risk management and anti-money laundering (AML) checks and procedures.
AI also has the potential to improve the insurance industry by supporting better products and pricing, underwriting, target marketing, and sales, claims management, and data mining, the report stated.