The fintech market is booming. Here’s a detailed look at its market size and growth.
If you listen to the buzz surrounding today’s tech market, fintech is the hot area to invest. However, in a market this new and disruptive, it’s difficult to get concrete information on the fintech market size or rate of growth. In this article, the Investing News Network breaks down the essentials of today’s fintech market, educating investors about the basics that they need to know to invest wisely.
Not just hype: Growing fintech market size
As it turns out, the fintech market isn’t just hype. There is concrete data to illustrate the amount of growth and investment in this area. According to the annual Fintech 100 report, published by KPMG and H2 Ventures, the global fintech financing has risen seven-fold over the past three years, to reach an estimated $20 billion in 2015. To put this into perspective, that’s a 66 percent increase in the level of fintech investment between 2014 and last year.
This growth far outstrips previous expectations about the fintech market size. For instance, Statista reported that, in 2013, the value of global investment in fintech ventures was approximately $3 billion and, by 2018, this was anticipated to reach $8 billion. As you can see, the market has already significantly surpassed this estimate.
So what does this mean for investors? The disparity between estimated growth for the fintech market size and the actual investment that we are seeing pour into the market today indicates that the market is growing at a far greater speed than was previously imagined. This spells opportunity for investors. With increasing market size comes increasing opportunities for savvy investors.
How to capitalize on the growing market
The best way to respond to the rapidly growing fintech market size is by investing early in the fintech market. There are a wide array of companies operating in this space, targeting everything from payments and transactions to lending, which means that there is an option for virtually every sort of investor. By investing now, investors can ride the market’s natural growth curve, and profit widely before fintech sector growth settles into its long term market stride.
And, although investing in a disruptive technology market is an inherently risky venture, there are some smart ways to mitigate risk and maximize reward in the fintech market. Take Square (NYSE:SQ), for example, a register service is a full point of sale with tools for operating every facet of a business. From accepting credit cards and tracking sales and inventory to small-business financing, Square deals with it all. The company’s CEO is Jack Dorsey, who is best known for his role as co-founder and CEO of Twitter (NYSE:TWTR). With a strong management team and relatively lengthy experience in the fintech space (the company was founded in 2009, prior to the major fintech boom), this company might offer a stable option for risk-averse investors.
Meanwhile, micro-cap companies like the Canada-based VersaPay Corporation (TSXV:VPY) offer a far more risky venture. However, with the right technology and management teams, these smaller companies have the potential to hit big. All told, the fintech market is large enough to offer a diverse range of investing options. For investors, the only static piece is advice is to invest early because this hot industry is set to see even more market growth.
This article was originally published on the Investing News Network on April 20, 2016.
Don’t forget to follow us @INN_Technology for real-time news updates.
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.