The International Trade Administration (ITA) at the US Department of Commerce recently published its annual report “2016 Top Markets Report Financial Technology”.
According to the key findings, China will emerge as the leading export market in the payment sector in 2017, while Japan will become the leading export market for the overall fintech sector.
“Payment services, with a 17.6 percent of the FinTech market share, have the highest adoption rate among FinTech products, followed by savings and investments at 16.7 percent, insurance services at 7.7 percent and online borrowing at 5.6 percent”, it said.
It says that while the payment ecosystem is currently dominated by banks, fintech newcomers are increasing the size of the overall payments sector and may be cutting into bank margins. To this end, it emphasizes that the next payment frontier is online payments, particularly mobile.
The report lists the various factors that are driving fintech revolution:
Technological developments: This includes social networks, big data analytics, and mobile access coupled with electronic applications, marketplace funding models and people-based marketing. In this context, it says that cryptocurrencies such as bitcoin and blockchain technology may prove highly disruptive to the way the financial services industry works.
Regulation: The report noted that fintech companies are benefitting from changes in the competitive and regulatory landscape after the 2008 financial crisis.
Favorable demographics: It pointed out that “millennials” that constitute a significant portion of the population in most countries are a major factor boosting fintech emergence. It said that early fintech adopters tend to be younger, urban and higher-income customers.
Transition from cash economy: The report highlights the importance of electronic payments as they reduce corruption, increase accountability and are quicker in response to a natural disaster. In addition, they also expand the consumer market, increase banking access to the unbanked, improve macroeconomic efficiency and encourage entrepreneurial activity.
Furthermore, the report lists the most innovative fintech companies. It names San Francisco-based Coinbase as the leading digital currency company, while Adyen, FangDD, Klarna, and Qufenqui among others have been listed as leading payment sector companies.
