There are numerous factors driving the adoption of financial technology (fintech) market development. Particularly within emerging nations, technology vendors and service providers are looking at ways to provide services to individuals who previously have never used financial services -- they're often referred to as the un-banked population.
Fintech platform revenues to support lending and financing are set to reach $10.5 billion globally by 2020, doubling the $5.2 billion expected this year, according to the latest worldwide market study by Juniper Research.
The analyst has predicted that growth would be driven by a combination of factors including an acceleration in peer-to-peer (P2P) lending, crowdfunding becoming a viable alternative to traditional lending mechanisms, and the deployment of next generation analytics platforms.
Fintech Market Development Opportunities
The study findings uncovered that, in the absence of credit checking bureaus in emerging markets, a credit applicant's social media activity will be a deciding factor for their loan applications, with suppliers developing equivalents to credit scores so that lenders can gauge their risk exposure.
Nevertheless, the research also cautioned that the process might meet with greater consumer resistance in developed markets, with many would-be applicants likely to perceive the practice as an unwarranted invasion of privacy.
Meanwhile, the research results indicate that in North America and Europe crowdfunding platforms would increasingly provide opportunities for affluent individuals to obtain a stake in promising start-ups.
Juniper has argued that with interest rates at record lows across the developed world, crowdfunding and P2P lending platforms offer individuals attractive alternatives to traditional investments.
Outlook for Fintech Crowdfunding
However, even if some of the analytics platforms would be sufficiently sophisticated to understand the nuances of distinct corporate operating environments, they might not be able to provide full evaluations of their respective management teams.
"Platform providers need to be transparent about how they assess firms and not just sell the tantalizing potential of funding the next Facebook. We are yet to witness a blockbuster exit for investors, but a successful IPO would cement crowdfunding's foothold in the marketplace,” said Michael Larner, analyst at Juniper Research.