According to a new market research report titled, “FinTech Blockchain Market by Application (Payments, Clearing, & Settlement, Identity Management), Provider, Organization Size, and Business Domain (Payment, Insurance, Capital Market, Commercial Banking, Regulatory Compliance) – Global Forecast to 2028.” The FinTech blockchain market is expected to grow at a CAGR of 59.9 percent from 2021 to 2028 to reach $36.04 billion by 2028.
The FinTech Blockchain Market is expected to reach $36.04 billion by 2028, at a CAGR of 59.9% during the forecast period of 2021 to 2028. Rising customer demand for bitcoins; increasing need for faster, cheaper, cross-border payment systems; higher compatibility with the financial services industry ecosystem; and growing demand for complete security mechanisms are the key factors driving the growth of the FinTech blockchain market.
However, factors such as the vague regulatory standards and frameworks and the economic downturn caused due to the COVID-19 pandemic have posed serious challenges to the growth of the FinTech blockchain market.
Impact of COVID-19 on the FinTech Blockchain Market
The COVID-19 pandemic has adversely hit many economies around the globe. To combat this pandemic, complete lockdowns and quarantine measures were in place across the globe. This has had a strong impact on various industries worldwide, and the FinTech blockchain industry is no exception.
The uncertainty regarding the possible length of lockdowns and supply chain disruptions has made it an arduous task for industry players to anticipate the resurgence in the FinTech blockchain industry. Thus, the crisis is expected to cause structural shifts that would have significant implications for this industry.
As the pandemic is expected to hinder the FinTech blockchain business, the demand for digital transformation is expected to stay elevated. Thus, digitally-driven intermediaries are proving to be effective, benefiting the FinTech blockchain market. Further, the FinTech blockchain market is projected to witness exponential growth amidst this pandemic, as various governments are implementing FinTech blockchain facilitates.
Encouraging growth of FinTech blockchain market during the covid-19
Authorities across the global regions are encouraging digital payment systems in response to the Covid-19 pandemic.
A rising number of work-from-home (WFH) arrangements, growing adoption of telemedicine, telebanking services, and an increasing number of teleconferencing further accelerate the push for e-commerce and online payment methods, which encourages the growth of the FinTech blockchain market.
Increasing adoption of e-learning and web-based learning methods also provides market growth opportunities, as most transactions such as fee payments are processed through digital platforms.
Leading banks like PNC Financial Services (U.S.) and JPMorgan Chase (U.S.) have announced a temporary closure of up to 25% of their branches, making online banking the only option for many of the customers in North America.
However, leading market players are focused on bringing the FinTech blockchain market back on track. Moreover, local governments are also undertaking several initiatives to mitigate the negative impacts of COVID-19. As a result, the FinTech blockchain market is expected to recover by 2024.
KYC systems driving growth of this market
The automation of KYC verification through blockchain technology is experiencing a surge in demand owing to factors, such as rising demand for distributed user data collection, growing need for automation and standardization of policy/operations, centralization of controls and risks, governance and data quality, the need for communication and transparency, and notable features like suspicious activity reporting and comprehensive authentication process.
With the adoption of blockchain in KYC compliance operations, the solution is developing a full audit trail that empowers the bank’s regulatory compliance and reduces the data validation cost across the entire financial network.
Furthermore, it provides notable benefits, such as flexible security and improved financial services, ensuring the supreme privacy of individual data. Also, KYC verification with the help of blockchain can provide a faster, easier, safer, and more effective verification system than traditional verification procedures.
Blockchain has a decentralized computing architecture that allows for the accumulation of data from different authoritative service providers into a single immutable, validated, and cryptographically secured database.
Leading software development companies have implemented blockchain-based KYC banking systems for effective customer service and risk management, which encourages the growth of the FinTech blockchain market.
Cross-border payment, clearing, and settlement segment
Based on application, the cross-border payment, clearing, and settlement segment is estimated to command the largest share of the FinTech blockchain market in 2021. The growing risk of fraud in the payment pathway, rising demand for superior payment experience, clarity in payment systems, and growing need to reduce transaction costs are the factors driving the growth of this segment.
FinTech blockchain solutions offer several benefits, such as accuracy, reliability, agility, reduce transaction cost, and faster transaction in the cross-border payment, clearing, and settlement domain.
Middleware and service providers
Based on provider, the middleware and service providers segment is estimated to command the largest share of the FinTech blockchain market in 2021. The increasing demand for smart contract services, rising need for account aggregation & financial wellness, and growing demand for banking (BaaS) payments are the factors driving the growth of the middleware and service providers segment.
Based on business domain, the payment segment is estimated to command the largest share of the FinTech blockchain market in 2021. The growing demand for micropayment, increasing P2P payment, rising scope of internet banking, and growing need for currency exchange are the factors driving the growth of the payment segment.
North America is the fastest-growing regional market
In 2021, Asia-Pacific is estimated to command the largest share of the FinTech blockchain market, followed by North America, Europe, Latin America, and the Middle East & Africa.
The market in North America is expected to witness rapid growth during the forecast period, mainly driven by the increasing adoption of technologies, such as blockchain AI and IoT. Besides, the growing demand for digital payment systems, increasing adoption of cryptocurrencies, and favorable government policies and regulations across North America are expected to boost market growth considerably over the coming years.