The Future of Finance: Fintech's Sustainable Growth and Global Impact

After years of hypergrowth, the fintech industry has entered a transformative phase focused on sustainable, profitable growth. McKinsey’s recent report highlights how fintechs can navigate these disruptive times effectively.

The industry has seen remarkable capital inflow, particularly in the last decade, with venture capital funding surging from $19.4 billion in 2015 to $33.3 billion in 2020—marking a 17 percent year-over-year increase. The momentum continued into 2021, where the pandemic accelerated digitization and increased liquidity in the financial system, leading to a staggering 177 percent year-over-year increase in funding, totaling $92.3 billion.

According to McKinsey, the future looks promising for fintechs, with revenues projected to grow almost three times faster than those in the traditional banking sector between 2023 and 2028. This shift in growth dynamics is accompanied by a significant change in consumer sentiment. Retail consumers now exhibit comparable levels of satisfaction and trust in fintechs as they do in established banks. This demand is particularly pronounced in developing economies; for instance, Africa boasted nearly 800 million mobile accounts in 2022, accounting for almost half of the global total, showcasing the increasing reliance on fintech solutions.

The demand for fintech services is not limited to retail consumers; B2B firms are also seeking innovative financial solutions. In 2022, 35 percent of small and medium-sized enterprises (SMEs) in the United States considered utilizing fintechs for lending, improved pricing, and seamless integration with their existing platforms. Meanwhile, in Asia, 20 percent of SMEs reported leveraging fintechs for payments and lending.

This growing interest from both retail and B2B sectors underscores the critical role fintechs will play in shaping the future of finance. As the industry continues to evolve, the emphasis on sustainable, profitable growth will be key to its long-term success, enabling fintechs to create value in an increasingly competitive landscape.