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Fintech has become an integral part of our lives, say experts
The revolutionary tech has revolutionalised traditional banking and significantly improves financial inclusion, security and efficiency
- PUBLISHED: Tue 15 Apr 2025, 11:00 AM
- By:
- Muzaffar Rizvi
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Fintech market size is expected to post a strong double-digit growth in the next five years as the revolutionary technology has not only transformed traditional banking but also led disruptions in telcos, insurance, financial services and e-commerce, experts say.
Leading executives, industry experts and analysts said digital finance will gain further traction among financial institutions seeking operational and cost efficiencies through blockchain and want to expand into news asset classes in coming years. They opined that fintech has been one of the fastest growing sectors of the last decade and will continue to record new highs in the next five years.
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Referring to a latest report, they said the global fintech market is expected to post over 14 per cent compound annual growth rate from $356.73 billion in 2025 to $686.85 billion by 2030 as more sectors will adopt the revolutionary technology to boost their operational efficiencies.
Nigel Green, CEO and founder of global financial advisory giant deVere Group, said legacy financial institutions had a good run, but fintech has flipped the script. “Banks are no longer the sole gatekeepers of credit and payments. Traditional insurers are getting outpaced by AI-driven risk models. And telcos are becoming fintech players themselves with mobile money and embedded finance,” Green told BTR.
“Look at banking — traditional institutions are scrambling to bolt on fintech solutions because customers now expect real-time transactions, seamless digital lending, and investment platforms that work at the speed of thought. Insurance is shifting from old-school underwriting to hyper-personalised coverage based on real-time data. And telcos? They’re already replacing banks in many regions, proving that financial services are no longer tied to brick-and-mortar institutions. Fintech is, in my opinion, improving and democratizing these industries,” he said.
He opined that fintech is growing and it’s taking over. For example, one unstoppable trend is that everything gets tokenised: Stocks, bonds, real estate, collectibles, among other things. Fractional ownership will be the norm, and fintech will be the backbone of this new investment era. “The fintech boom is here. And if you think the last decade was wild, just wait because the next five years will make today’s financial system look ancient,” he said.
Transforming Traditional Banking
Rajeev Kakar, Corporate Board Member, Entrepreneur, Founder of Dunia Finance, Global Co-founder of Fullerton Financial Holdings, and former Citibank CEO of the Turkey-MEA region, said fintech has fundamentally transformed traditional banking by unbundling financial services and enhancing customer experiences.
“Previously, banks relied on complex, rigid systems that impeded agility. Fintech has introduced modular, API-driven, and cloud-based solutions, making banking more flexible, scalable, and real-time. The rise of open banking has forced banks to shift from closed, proprietary models to collaborative ecosystems, offering seamless integration with third-party services,” Kakar told BTR.
Additionally, Banking-as-a-Service (BaaS) has allowed fintech to embed financial services into non-banking platforms, blurring industry boundaries.
Traditional banks, which one time controlled all banking and financial businesses, risk becoming mere utilities as handlers of regulatory heavy processes and now are up against new-age fintech firms — like, neobanks, digital lenders, payment disruptors, and other anncillary fintech-driven AI, automation, and data analytics providers — who, as insurgents, dominate customer interactions and internal processes.
Efficiency Gains from AI
As an information-based, highly digitalised, data-driven industry, banking is well placed for efficiency gains from Artificial Intelligence (AI). For fintechs in particular that do not carry legacy IT system issues, the use of AI and especially Gen AI, can enhance productivity through the automation of internal processes, potentially lead to improvements in risk management, and enhance customer experiences,” Farooq Khan, VP-Senior Analyst - Financial Institutions, Moody’s Ratings, said.
“We expect AI technology integration into financial processes, where AI streamlines traditionally human-intensive processes to deepen and play a key role in shaping the future of fintech. This would drive efficiency gains — a credit positive — as well as growth in revenue per customer and innovation through bespoke financial product provision,” he said.
He was of the view that Integrating technologies such as AI into financial institutions is both technically and financially demanding due to strict regulations, legacy systems, and complex processes.
Khan said AI systems require high-quality data for accurate decision-making, necessitating data consolidation at scale and cleaning to ensure usability. “The quality of a bank’s IT infrastructure is a key component in the success of AI adoption but because fintechs do not have complicated legacy IT infrastructure built up over several decades, tending to be cloud native at start, embedding AI technologies may prove to be less cumbersome that for larger banking institutions, he said.
Regulatory considerations are another factor, as fintechs would need to navigate complex compliance requirements while leveraging AI technologies. Operational risks would also arise from AI’s extensive data needs, leading to scalability and interoperability challenges, while centralisation risks can create single points of failure, weakening system resilience. Rapid AI advancements also introduce technology risks, as financial firms must continuously invest in infrastructure to prevent obsolescence.
Moreover, profitability remains a challenge for many fintech firms that tend to lag larger banks in this regard and have taken time to become profitable. “This is in large part due to the fierce competition with tech-savvy incumbent banks and many other fintechs for clients, market share, financial and people resources, as well as access to equity. As a result despite significant investments in AI, fintechs would require a strategic approach to AI integration, balancing innovation with risk mitigation,” according to Khan.
A Growing Sector
Shailesh Dash, Founder of Dash Venture Lab, said fintech is an integral part of all “our lives today in one way or the other. It has significantly eased our lives” by improving financial inclusion, security and convenience/efficiency. “A large part of our lives is today driven by our financial management and needs which is eased a lot by the fintech revolution. Fintech has also played a major part in the growth of several of industries such as financial sector, banking, insurance, telco, etc as a result positively impacting our economies,” Dash told BTR.
He said fintech has been one of the fastest growing sectors of the last decade and will continue to record new highs in the next five years as well as digital payments expected to reach $520 billion by 2030. “Significant growth is expected to come from Artificial Intelligence and Machine Learning, other factors which will drive faster fintech growth will be open banking, embedded finance and quantum computing. This is all expected to drive fintech to be a $1.5 trillion industry by 2030,” he said.
To a question, he said financial sector is one of the most regulated in today’s world which is why “we have seen the crypto segment growing” at such a rapid pace.
“Challenges are going to be unique to all financial segments (fintech) as the technology and speed of transactions evolve. I see it as more laws/regulatory environment keeping up with the change in technology rather than fintech as a sector as we believe financial sector is fairly regulated already but the real challenges would be in cyber security and integration with the legacy systems as well as different regulations in different parts of the world,” he said.
Driving Digital Banking
Kakar said fintech will continue to accelerate digital banking by making financial services faster, more personalised, and seamlessly integrated into daily life. “Cloud-native banking, AI-driven automation, and real-time payments will become the norm, to help ensure mobility solutions and to promote efficiencies in banking processes.”
He was of the view that the world is increasingly flatter in the banking universe too with ‘Open banking’, which is being adopted fast by banks to expand client base and to realise the vast new opportunities arising, to leverage as a capability for aggregating third party solutions at speed, rather than depend on proprietary solutions, to be able to position themselves as a preferred provider of products/solutions on successful fintech platforms, who are successful in owning the client relationship and journey.
“Increasingly, I expect such ‘embedded finance’ solutions will redefine how banking services are delivered, with financial products integrated into e-commerce, ride-hailing, and social media platforms — which are uniquely a part of each client journey based on their individual preference. Apart from this, capabilities like AI and machine learning are increasingly adding value to erstwhile people-intensive middle-office functions, like ‘fraud detection, credit underwriting, and hyper-personalisation’, while capabilities like blockchain help improve ‘transaction monitoring and digital security’,” he said.
To remain relevant, he said banks need to shift from a ‘product-centric’ to a more ‘customer-centric and ecosystem-driven’ model, as no single bank can hope to be the sole-provider of solutions to any corporate or individual client.
Why Banks Adopting Fintech
Kakar opined that banks are adopting fintech to remain competitive in a rapidly evolving financial landscape.
“The growing threat from digital disruptors, such as neobanks and fintech startups, is forcing traditional banks to rethink their operating models. Customers now demand real-time, personalised, and frictionless banking experiences, which fintech provides through AI-driven automation, big data analytics, and cloud-based solutions.
“Regulatory changes, particularly open banking mandates, have also driven banks to embrace fintech partnerships. With new data protection laws, which mandate that data is the property of each customer and not the bank, regulators are mandating banks to open APIs for allowing the secure sharing of customer data with third-party providers, to enable clients to access better financial services as part of their preferred journeys, in a regulated environment which provides for regulatory oversight, compliance, security, and confidentiality.”
Also, he said fintech has helped enhance risk management and fraud detection in banks, by leveraging AI and machine learning for predictive analytics. In addition, capabilities like embedded finance and Banking-as-a-Service (BaaS) have helped create new revenue streams for banks, by enabling them to integrate financial services into non-traditional platforms.
“Finally, adopting fintech is no longer a ‘choice’ but a ‘need’ for bank. The ongoing convergent disruptive forces in our world’s rapidly evolving increasingly digitalising ecosystem is making it imperative for banks to adopt fintechs to survive in this new paradigm — as bank-boards are realising that to survive and thrive, they need to shift needed from a traditional proprietary-provider approach to one of adopting a fintech-partner approach, to complement the gaps in their capabilities, and to deliver faster innovation with increased agility at lower costs,” he said.
New Challenges Ahead
Needless to say, while fintech has revolutionised banking, they are also creating new challenges such as displacing traditional jobs as manual processes are eliminated, and introduce new risks to operational resilience through cybersecurity risks, frauds risk, and operational disruption threats. However, with these challenges come new opportunities for reskilling of talent, as new roles are required in areas of data science, cybersecurity, financial technologies, digital transformation, etc.
“The shift to digital-only banking has helped enable mobility solutions but has also adversely impacts financial accessibility for less-tech-savvy customers, especially those senior in age. This may cause an exclusionary impact on this segment and also increases risk of fraud through social engineering techniques, which requires greater effort and investment in customer education initiatives,” Kakar said.
He said fintech solutions also add new regulatory complexities to banks, requiring them to continually invest in solutions to protect themselves against cyber & security threats, which increases compliance risks and makes operational/other risk management more challenging in banks.
Kakar was of the view that the bigger existential issue that banks face is the possible risk of disintermediation, where fintech increasingly win over high-margin customer-facing and experience-driven services like lending and payments and risk leaving traditional banks with low-margin regulatory-heavy functions.
“This shift, if not checked on an timelybasis by a bank, can erodeits profitability and, hence, to survive banks have to adopt fintechs and become platform providers rather than sticking to their traditional product seller role. On balance, despite such challenges, I believe that fintech will have a net positive effect on banking, as they empower clients and enable their success by driving innovation, efficiency, and offering customer-centric solutions. Banks who do not adapt will risk getting obsolete and/or become take-over candidates.”
Greater Customer Empowerment
“I believe that in the next few years, fintech will rapidly reshape banking into real-time and AI/data-driven ecosystem-integrated entities, to help successfully drive customer engagement though hyper-personalised solutions that are custom-made for each client on a truly customer-centric basis,” Kakar said.
“I expect banking to become more straight-through by leveraging Blockchain and API-based technologies, which will help reduce transaction costs, increase transaction speed, enhance transparency, reduce fraud, and enable peer-to-peer transaction capability without multiple intermediaries.
“We should also expect to see greater customer empowerment through open-finance-enabled networks that are interoperable and help fulfil of ‘banking, investments, insurance, lending, e-commerce solutions’ digitally, through straight-through processing reliably at high speed. The use of such technologies will empower customers in fulfilling their financial needs, as part of their preferred customer journeys using preferred digital IDs. So, it is importantly for successful banks to take the first mover advantage on this and also to continuously improve their service value proposition, to be the preferred provider and partner,” he said.
With such new fintech-led technologies enriching financial services, which have traditionally been seen as a chore by clients, it would only be natural to see the current mobile app-based solutions increasingly become embedded into smart lifestyle devices, wearable technologies, and IoT-connected ecosystems.
“With all this digitisation, I would expect data-protection, security and operational resilience to become critical and be expected to deliver at 9-sigma levels, through the use of stronger customer authentication, use of ML/AI-driven solutions (and even perhaps GenAI solutions) and the increased use of Central Bank Digital Currencies and other stablecoin-based cryptocurrencies for cashless transaction capabilities on a friction-less X-border payment system.
“Finally, I expect that fintechs will be instrumental in democratising access of finance to all segments of society and, with such rapid use of digital financial services, I expect to see increased regulation/oversight and enhanced governance standards globally,” Kakar said.
— muzaffarrizvi@khaleejtimes.com
