A number of factors, such as the increasing adoption of the artificial intelligence (AI), machine learning (ML), and internet of things (IoT) technologies across financial institutions, burgeoning demand for cloud services, surging focus of enterprises on cost cutting and efficiency improvement, and rising penetration of the 5G technology, are expected to drive the AI in fintech market at a vigorous CAGR of 19.8% during 2020–2030. According to P&S Intelligence, the market revenue will rise from $7,702.7 million in 2020 to $46,881.9 million by 2030.
The increasing focus of financial institutions on improving efficiency, enhancing productivity, and reducing operational costs will encourage them to integrate AI solutions. Financial organizations across the world are using AI chatbots for several tasks, such as sales, online chats, and customer care, to improve customer experience. Additionally, the incorporation of AI chatbots in financial institutions helps in minimizing or eliminating human errors.
The application segment of the AI in fintech market is categorized into chatbots, credit scoring, fraud detection, quantitative and asset management, and others. Under this segment, the quantitative and asset management category accounted for the largest market share in 2020 as AI is changing the asset management sector by enabling fundamental analysts to extract information rapidly and conduct a large number of research studies. Additionally, AI solutions allow fundamental analysts to discover effective investment ideas.
In 2020, the North American AI in fintech market generated the highest revenue due to the presence of developed information technology (IT) infrastructure, deep penetration of the 5G technology, and hefty investments in advanced technologies. Moreover, the increasing focus of the U.S. government on integrating the AI technology in the financial sector will catalyze the market growth in the region. For instance, the American AI Initiative of the U.S. government aims to develop an AI workforce, establish AI technical standards, unleash federal AI computer and data capabilities, and increase AI expenditure with international allies.
Whereas, the Asia-Pacific (APAC) AI in fintech market is expected to demonstrate the fastest growth throughout the forecast period (2021–2030), owing to the mounting investments being made in the IT infrastructure, booming economy, soaring number of government initiatives for the deployment of the AI, IoT, and other advanced technologies across verticals. Additionally, the hefty investments by market players in the untapped markets of APAC are contributing to the market growth in the region.
Thus, the surging focus of financial institutions on improving customer experience and enhancing productivity will facilitate the adoption of the AI technology among them.