News: AI holds key role in fintech's next 5-year development – Study reveals how

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AI holds key role in fintech's next 5-year development – Study reveals how

For the next five years, AI is considered the most crucial factor for the development of the fintech industry, with 71% of those surveyed emphasising its importance.
AI holds key role in fintech's next 5-year development – Study reveals how

AI is becoming prevalent in every sector, and Fintech is no exception. In the near future, Fintechs view artificial intelligence (AI), the digital economy, embedded finance, and open banking as pivotal factors for industry development.

During a press conference in Davos during the World Economic Forum’s Annual Meeting, the collaborative report from the Cambridge Centre for Alternative Finance (CCAF) at Cambridge Judge Business School and the World Economic Forum (Forum) was unveiled, indicating that the global fintech industry is continuing its growth momentum. 

Bryan Zhang, Executive Director and Co-Founder of the Cambridge Centre for Alternative Finance at The University of Cambridge Judge Business School, presented the findings during a panel discussion and noted that "the global FinTech industry is demonstrating strength and resilience." 

He highlighted that the global fintech industry continues to thrive, with customer growth rates consistently surpassing 50% across various industry verticals and regions. Adding insights to the findings, Drew Propson, Head of Technology and Innovation in Financial Services at the World Economic Forum, mentioned that 63% of the surveyed fintechs considered their regulatory environment to be sufficient and suitable for their platform activities. 

"This is something we absolutely were not expecting," she emphasised. "I think we all know that fintechs and regulators have not always had the most loving relationship. But this really demonstrates progress and a lot of effort on both the public and private sector sides to bridge that gap," she said. 

Propson also expressed high encouragement in witnessing the continued robust performance of the fintech sector post-pandemic, with average global customer growth rates exceeding 50% from 2021 to 2022.

However, she acknowledged the existence of challenges, including a challenging macroeconomic environment and reduced fintech funding. "Overcoming these challenges and realising sustained social and economic benefits from the fintech industry will require continued data gathering to better understand pain points and committed support from public and private sector actors within financial services," she stated. 

As per the findings, AI is identified as the most crucial topic for the development of the fintech industry in the next five years, with 71% of respondents expressing its significance. Embedded finance, the digital economy, and open banking closely followed as the second most relevant factors, with percentages ranging from 53% to 54% among surveyed fintechs. 

On the flip side, fintechs explicitly point out a lack of incentives or mechanisms to contribute to environmental and inclusion goals. A significant 41% of fintechs emphassze the need for sustainable finance schemes, and an additional 31% deem the existing schemes as ineffective. 

Bryan Zhang, Executive Director and Co-Founder of the Cambridge Centre for Alternative Finance, emphasised, "As the global fintech industry continues to grow and evolve, it is imperative that the pace of regulatory and supervisory innovation match that of financial innovation. 

The report highlighted the importance of having an appropriate and adequate regulatory environment that is conducive to the scalable and sustainable development of fintech. The study findings also indicated the enormous potential of digital financial services to widen access to finance for consumers and SMEs by providing more accessible, affordable, and personalised financial products and services."

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Topics: Technology, #ArtificialIntelligence, #HRTech, #HRCommunity

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