The global fintech as a service market is expected to witness significant growth over the forecast period. The market growth can be attributed to the increase in investments made by banks in advanced technologies for improving their offerings as well as customer experience. Fintech as a Service (FaaS), or the provision of financial technologies as a service, is witnessing increased demand across financial institutes seeking a cost-effective way to optimize their end-to-end processes and stay in compliance with banking regulations. At the same time, the benefits offered by FaaS, such as low maintenance fees, low-cost processing fees, fraud and chargeback prevention, and enhanced customization, are driving the demand for FaaS platforms.
Several banking technology providers are making efforts to enter into partnerships with fintech as a service providers for enhancing their offerings. These enhancements aim at helping banks improve their customer experience. For instance, in September 2021, i2c Inc., a banking and digital payment technology provider, announced its partnership with Solid Financial Technologies, Inc., a FaaS platform provider. The partnership aims to streamline i2c Inc.’s payments, banking, and card services.
Bankers are increasingly demanding hassle-free and seamless access to loan services and products, which is creating the need for enhanced FaaS platforms among financial institutions; a rise in loan applications can make it difficult for banks with a limited workforce to process all requests within the stipulated timeframe. However, the integration of Robotic Process Automation (RPA) functionalities in fintech as a service platforms allows banks to improve and expedite the lending process and avoid errors by allocating recurring and monotonous tasks to automated processes.
The start-ups have been the focus of venture capital investments in recent years, with the funds allowing them to enhance their product offerings and market positions. These investments are expected to create new opportunities for FaaS market growth over the forecast period. For instance, in July 2021, Railsbank Technology Ltd, an API developer, raised USD 70 million in a fundraiser led by Anthos Capital, a U.S.-based investment company. The company would use the funds to develop its fintech as a service platform and offer various product development solutions to customers.
The key players in the fintech as a service market include Synctera Inc., Rapyd, Neo Technologies, FISPAN, Fafnir LLC, and GFS. These players are focusing on adopting growth strategies such as partnerships, mergers & acquisitions, and new product development to further expand their global market presence. For instance, in July 2021, Rapyd announced an agreement with Arion Bank to acquire Valitor, a payment solution company based in Iceland. This acquisition has helped Rapyd to strengthen its offerings and market position.
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