What Business Opportunities Can be Captured as Banking Evolves in the Next Decade
Zion Market Research's findings indicates that as of August 2022, the worldwide fintech-as-a-service platform market size is expected to increase to over $949 billion by 2028, with a compound yearly growth rate (CAGR) of about 17%.
A report issued by the Treasury Department in November 2022 describes in detail how big and small businesses are providing financial services at actual consumer points of need, opening up a new market for startups, small businesses, and regional banks to diversify their product offerings and compete with national banks and institutions.
What we currently think of as banking will evolve into the foundation of our daily digital activities, taking on new forms and legal requirements. Here are the top Three banking trends and opportunities that Entrepreneurs can leverage, to capture the market.
1. A New Crop of Fintech Companies will Spawn from the Transfer of Wealth By Gen Z.
Gen Zers financial habits and behaviors will shape the next decade of banking, as the wealth transfer proceeds discreetly. By 2031, their income will have surpassed that of millennials, and it will have increased 5x by 2030 to $33 trillion, accounting for more than a quarter of global revenue.
Survey results released in November 2022 by the Stanford Graduate School of Business, the Rock Center for Corporate Governance, and the Hoover Institution of 2,470 investors indicated significant demographic differences, with younger shareholders indicating want fund managers to pursue ESG objectives.
As a result, Fintechs and BaaS (Banking as a Service) platforms will emerge, catering specifically to young wealth and focusing on concierge-style wealth management. And as it spreads out the red carpet for young people, the banking industry will continue to become more democratized.
2. The Embedded Financial Ecosystem Will be Improved By Additional Regulations.
Several McKinsey partners coauthored an article in October 2022 that stated embedded finance generated $20 billion in revenue in the U.S. alone in 2021. Today's consumers have access to "buy now, pay later" services for online purchases, one-click payments on Uber, Amazon, or Walmart, and the ability to plan vacation and lodging with built-in insurance options.
Embedded finance's infrastructure is still in its early stages, and the business has developed swiftly without any oversight or quality control. Regulators will get more involved as the business develops, leading to more specialized, effective banking products. In the end, customers will benefit since a better banking product will be produced.
3. The Normalization of Crypto Through Regulation.
One of the pillars of decentralized financial currencies continues to be the future of finance. It will manifest itself in a number of ways over the next several years, including through securities and legislation, the debut of the first consumer enterprise product, and an increase in use cases outside of finance.
Utility and private business token investments, which are equity certificates produced on the blockchain often linked to a firm's shares, may soon be subject to Securities & Exchange Commission (SEC) regulation. This oversight will be appreciated and bring about adequate investment-risk disclosure, but it will also mean that they are no longer available to everybody.
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