Fintech as a Service (FaaS) Market worth $676.9 billion by 2028 - Exclusive Report by MarketsandMarkets™

CHICAGO, June 8, 2023 /PRNewswire/ -- With growing traditional financial institutions' acceptance, service expansion, service integration with AI and automation, data analytics emphasis, worldwide expansion, and improved security and compliance, the future of the Fintech as a Service (FaaS) business appears bright. These patterns show that FaaS will continue to develop and thrive as the financial services sector moves forward.

The Fintech as a Service (FaaS) Market is expected to experience substantial growth, with projections indicating a rise from USD 310.5 billion in 2023 to USD 676.9 billion by 2028, exhibiting a compound annual growth rate of 16.9%, during the forecast period, according to a new report by MarketsandMarkets™. The growth of the FaaS market is driven by factors such as the emergence of cloud computing technology which will facilitate operational flexibility and scalability for businesses and increasing market demand for efficient compliance and regulatory solutions.

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Scope of the Report

Based on the Fintech as a Service market, the Payment segment is expected to hold the largest market share during the forecasted period

Payments are essential to financial transactions, and virtually every business and individual requires payment capabilities. The payment segment encompasses various services, such as payment processing, digital wallets, peer-to-peer transfers, and mobile payments. The rapid growth of e-commerce, coupled with the increasing digitization of financial transactions, has fueled the demand for payment services. Businesses and consumers increasingly embrace online and mobile payments, driving the expansion of the payment segment within the FaaS market. Fintech companies have introduced innovative payment solutions that challenge traditional payment methods. These disruptive solutions offer improved user experiences, faster transactions, lower costs, and enhanced security. Payment services have a global market reach, as businesses and individuals worldwide engage in cross-border transactions. FaaS providers offering payment solutions can cater to customers globally, expanding their market size and revenue potential.

By Application, Compliance & Regulatory Support to hold a larger market size during the forecast period

Compliance and regulatory support are vital in mitigating risks associated with financial transactions and ensuring the security and integrity of customer data. FaaS providers offer compliance and regulatory support solutions to help financial institutions comply with these regulations more quickly and efficiently. These solutions can include software, services, and data that can help financial institutions to automate compliance processes, identify and mitigate risks, and track compliance status. The use of fintech as a service solution for compliance and regulatory support is growing rapidly as financial institutions are looking for ways to reduce the cost and complexity of compliance. This growth is expected to continue in the coming years as the regulatory environment becomes more complex and financial institutions seek to improve their compliance posture. These benefits create a massive demand for FaaS solutions in the market.

By region, Asia Pacific is to grow at the highest CAGR during the forecast period

In recent years, Asia Pacific has undergone tremendous economic and political changes. Governments in the Asia Pacific are supportive of fintech innovation. This provides a favorable environment for the growth of fintech. Asia Pacific is home to the world's largest and fastest-growing population; hence, Mobile payments are becoming increasingly popular. The rising smartphone penetration and the growing demand for convenient and secure payment methods are driving the growth in this region. The region is experiencing rapid economic growth that increases disposable income and the need for financial services. The FaaS market in Asia Pacific is expected to grow significantly in the coming years. This growth will be driven by the rising demand for financial services, the increasing adoption of new technologies, and the supportive regulatory environment.

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Fintech as a Service (FaaS) Market Dynamics

Driver:

• Operational flexibility and scalability with advent of cloud computing technology
• Innovation of AI and blockchain
• Growth in demand for streamlined compliance and regulatory solutions

Restraint:

• Complexity involved in integration with legacy systems
• Issues related to data security and privacy
• Risks associated with geopolitical and macroeconomic factors

Opportunities:

• Increase in shift toward digital banking and payments
• Leveraging technology to improve operational efficiency
• Expansion of cross-border payments and remittances

Challenges:

• Lack of interoperability and standardization
• Complexity and cost associated with financial regulations
• Scalability and infrastructure challenges of FaaS

Top Key Companies in Fintech as a Service (FaaS) Market:

PayPal (US), Mastercard (US), Fiserv (US), Block (US), Rapyd (UK), Envestnet (US), Upstart (US), Solid Financial Technologies (US), FIS (US), Synctera (US), Stripe (US), Adyen (Netherlands), Dwolla (US), Finastra (UK), Revolut (UK), Fispan (Canada), NIUM (SG), Airwallex (AUS), SoFi (US), Marqeta (US), Finix (US), Synapse (US), are the key players and other players in the FaaS market.

Recent Developments

• In May 2023, Rapyd announced its strategic partnership with Belvo. This partnership merges Rapyd's expansive international payment infrastructure with Belvo's deep knowledge and proficiency in Open Banking, resulting in a powerful synergy that unlocks new business opportunities across the region.
• In April 2023, Block launched Tap To Pay for Android. Tap To Pay on Android lets sellers accept payments directly from their phones without additional hardware.
• In April 2023, Fiserv announced its collaboration with Equifax. Fiserv and Equifax will launch collaborative commercial solutions that employ new analytics to bolster business authentication, expedite account acquisition, and elevate risk evaluation.
• In March 2023, Mastercard acquired Baffin Bay Networks. This strategic acquisition will enable Mastercard to strengthen its ability to assist businesses in tackling the ever-evolving threat landscape of cyberattacks.
• In February 2023, Upstart announced a partnership with The Bank of Denver. This partnership enables The Bank of Denver to provide its customers with a wider range of financial solutions through Upstart's cutting-edge platform, including personal and auto refinance loans.

Fintech as a Service (FaaS) Market Advantages:

• Companies can quickly start and scale their financial services operations thanks to FaaS. Businesses can avoid the time-consuming process of creating their own systems from scratch by utilising the fintech providers' already-existing infrastructure and technology. This shortens the time it takes for new financial services and products to reach the market, enabling businesses to react swiftly to client demands and market trends.
• It can be difficult and expensive to implement a complete financial services platform. FaaS does away with the requirement for substantial upfront expenditures on infrastructure, technology, and personnel. Instead, businesses can adopt pay-as-you-go or subscription-based ready-to-use, plug-and-play solutions provided by fintech providers. Businesses may deploy their resources more effectively and concentrate on key strengths thanks to this cost-effective strategy.
• FaaS suppliers often provide extremely scalable platforms that can handle business development and changing needs. Fintech companies are able to easily scale up their infrastructure to manage growing transaction volumes and user bases as consumer demand rises. This scalability gives businesses the freedom to expand their operations without having to worry about expensive infrastructure updates or capacity limitations.
• Since the financial sector is so heavily regulated, complying with regulations can be difficult and time-consuming. FaaS suppliers are experts in navigating the regulatory environment and making sure that their platforms follow the relevant guidelines. By implementing FaaS, businesses may transfer the responsibility for regulatory compliance to knowledgeable providers, minimising risks and expenses associated with compliance.
• Companies can assign management and upkeep of financial operations and infrastructure to specialised providers by using FaaS. By focusing on their core capabilities and strategic ambitions, firms are able to avoid devoting time and energy to the management of intricate financial systems. FaaS enables businesses to concentrate on providing value to their clients and setting themselves out from the competition.

Report Objectives

• To define, describe, and forecast the FaaS market based on type, technology, application, identity, end user, and regions
• To provide detailed information about the major factors (drivers, opportunities, restraints, and challenges) influencing the growth of the fintech as a service market
• To forecast the fintech as a service market size across five main regions: North America, Europe, Asia Pacific, Middle East and Africa, and Latin America
• To analyze subsegments of the market with respect to individual growth trends, prospects, and contributions to the overall market
• To profile the key players of the fintech as a service market and comprehensively analyze their market size and core competencies
• To analyze the opportunities for stakeholders by identifying the high-growth segments of the market
• To track and analyze competitive developments, such as product enhancements and new product launches; acquisitions; and partnerships and collaborations, in the global fintech as a service market.

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