FinTech An Emerging Disruptor: Stealing 3% Of Incumbents' Revenue And Climbing
Fintech's outgrew incumbents 3x the pace in 2024
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HAND-CURATED FOR YOU
Short take—fast, focused, and straight to the point.
Fintechs have captured a mere 3% of global financial services revenue, which, believe it or not, is a smashing success.
Three percent may not seem like a lot, but given how fintechs sprang from nothing and are attacking incumbents with high walls, this is a significant feat and should be celebrated, not ridiculed.
Fintechs will never capture market share from incumbents they aren’t designed to. Incumbents are deeply entrenched in society, with massive revenue streams. Also, they will always fight back and buy or copy fintechs that are too successful. If fintech were to capture 15% of FinServ revenue, it would be a miracle.
Note also that while we are looking at total revenues, fintech’s success has been highly concentrated within (in order of size) payments, deposits, lending, trading & investment, insurance and financial infrastructure.
Payments are so dominant that they are roughly four times the size of the No. 2 deposits, which are predominantly neobanks.
So 3% isn’t at all bad, and with growth 3x that of incumbents, maybe we will see 10% in a few years.
Those wishing for 50% or more will have to readjust their expectations.
👉Fintech by the numbers:
🔹 21%: Global fintech revenues grew robustly at 21% in 2024 (versus 13% in 2023), driven by impressive results from challenger banks and trading and investment fintechs.
🔹 3x: The pace at which fintechs outgrew incumbents in 2024.
🔹 25%: Increase in average EBITDA margins of public fintechs in 2024—as fintechs continued to shift from a "growth at all costs" to a "sustainable growth" mindset.
🔹 $231 billion: Total revenue generated by fintechs with more than $500 million in annual revenue— representing approximately 60% of the global fintech industry’s total revenue.
🔹 150: The number of fintechs, globally, founded before 2016 that have raised more than $500 million in cumulative equity funding and that have not yet gone public.
🔹 3%: Share of global banking and insurance revenue pools penetrated by fintechs—with many holes remaining by both vertical and geography.
🔹 5: Segments out of 23 in which fintech success has been concentrated so far: digital wallets, acquiring and vertical SaaS, challenger banking, crypto trading, and BPNL.
🔹 24: The number of profitable challenger banks globally with at least $500 million in annual revenue. Their odds of success are higher in product and customer expansion than in global expansion.
🏝️ Short takes are holiday editions! Shorter, yet packing a punch, even if there are more typos!
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