Artificial Intelligence In Fintech Market Regulatory Challenges and Solutions

The global artificial intelligence in fintech market was valued at USD 9.45 billion in 2021 and is anticipated to reach USD 41.16 billion by 2030, reflecting a compound annual growth rate (CAGR) of 16.5% from 2022 to 2030. Fintech, short for financial technology, leverages modern technology to enhance or automate banking and investment processes.

Artificial intelligence (AI) is extensively utilized in financial institutions to identify and prevent fraud across digital banking platforms. This encompasses mobile banking, digital loans, insurance, credit scoring, trading, and asset management. AI technology can analyze a customer's usual behavior by tracking their interactions and transactions. For example, in May 2022, Brightwell Payments, Inc., a company focused on financial solutions for secure global money transfers, launched ARDEN. This AI-driven risk-detection engine helps fintech companies protect their cardholders and financial assets.

Key Market Trends & Insights

• North America led the market in 2021, representing over 40.00% of global revenue. This dominant share is largely due to a strong focus on R&D innovations in the developed markets of the U.S. and Canada.

• In terms of components, the solution segment was the largest in 2021, accounting for over 77.5% of global revenue. This prominence is attributed to software tools that facilitate the deployment of AI-enabled solutions in banking, enabling accurate and timely data extraction from vast datasets.

• By application, the business analytics and reporting segment was the leader in 2021, contributing over 32% of global revenue. This segment supports regulatory compliance and customer behavior analysis, with its growth driven by enhanced operational efficiency, better decision-making, and increased revenue.

• Regarding deployment, the on-premise segment captured the largest revenue share of more than 57.00% in 2021. On-premise solutions allow firms to install software or services within a financial institution's infrastructure. Meanwhile, the cloud segment is expected to experience the fastest CAGR from 2022 to 2030, driven by AI algorithms that learn from historical data in a cloud setting, identify current trends, and provide recommendations.

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Market Size & Forecast

• 2021 Market Size: USD 9.45 Billion

• 2030 Projected Market Size: USD 41.16 Billion

• CAGR (2022-2030): 16.5%

• North America: Largest market in 2021

• Asia Pacific: Fastest growing market

Key Companies & Market Share Insights

The growing competition in the finance sector, along with the need for improved financial operations, cost savings, and enhanced client engagement, poses challenges to the growth of AI in the fintech industry. These factors highlight the risk of underperformance in a competitive business landscape, making AI solutions essential in fintech. Recently, market players have pursued collaborations and partnerships to strengthen their positions. For example, in April 2022, Gupshup, a leading conversational messaging platform, announced its acquisition of Active.Ai, a private finance firm that specializes in AI. This acquisition enhances Gupshup's Customer Experience (CX) offerings for clients in the BFSI sector.

Key Players

• Microsoft

• Google LLC

• Salesforce, Inc.

• International Business Machines Corp.

• Amelia U.S. LLC

• Nuance Communications, Inc.

• ComplyAdvantage.com

• Narrative Science

• Affirm, Inc.

• Upstart Network, Inc.

• Instructure, Inc.

• Intel

• Inbenta Technologies

• Amazon Web Services

• Oracle

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Conclusion

Artificial Intelligence is widely employed in financial institutions to detect and prevent fraud in digital banking, including mobile banking, digital loans, insurance, credit scoring, trading, and asset management. For instance, in May 2022, Brightwell Payments, Inc. launched ARDEN, an AI-driven risk-detection engine designed to safeguard cardholders and financial assets for fintech companies.