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This Year, The Global Fintech Sector Is Expected To Be Valued At US$310 Billion

With a 25 percent compound annual growth rate (CAGR), US-based Toptal estimates that the global fintech business will be valued at US$310 billion by year's end. In addition to providing a freelancing platform, Toptal connects organizations with freelancers in a variety of fields, including developers, product managers, and financial specialists. 

The term "Fintech" refers to technology that aims to enhance and automate the supply and usage of financial services to consumers. According to Toptal's current State of Fintech Industry study, digital companies have received a flood of capital in recent years. In 2018, venture capital firms invested a total of US$254 billion in 18,000 businesses throughout the world, an increase of 46 percent over the previous year's total. Initial indications indicate a decline in funding levels in the first half of the year, followed by a small rise in the third quarter.

In the growing firm area, the biggest sector is the fintech industry, and this is true across all sectors. A forecasted annual growth rate of around 25 percent through 2022, reaching US$309.98 billion, was predicted for the global fintech business, according to the analysis. 

According to the report, this, along with the decline in investment for seed-stage startups, speaks to a general consolidation and development of the industry. There will be consolidation required and probably some high-profile failures as the industry and fintech ecosystem mature, according to the business. It said it was now time to determine which firms are here to stay and can become successful.

What Is The Future Of Fintech?

Over the last decade, several factors have contributed to the progress of Fintech. Nearly every aspect of our daily activities has been transformed by technological breakthroughs. Fintechs have come in to fill the void left by the failure of traditional financial institutions to keep pace with changing customer behavior. As fintech becomes a significant part of our daily life, the demand for fintech companies, including forex brokers increases significantly. For this reason, to surpass competitors, many companies use SEO in order to attract more customers and give them additional information about the company and its services. Traditional financial institutions are being forced to adapt or be left behind as technological advancements have decreased the barriers to entry. Fintech will speed up and streamline financial transactions. If conventional banking does not adopt blockchain technology, it will face danger.

Many banks have already teamed up with Fintech companies to improve their services. Financial institutions are finding that customers are less devoted to brands and more interested in speed, accuracy, transparency, and other advances in technology. 

In the post-COVID-19 digital world, it will be critical to adapt to market needs. We have witnessed continuous fast expansion in the FinTech industry. When it comes to the growth of payment services, COVID-19 has had a significant influence. New technology advancements have been used in real-world use cases, which has allowed the crypto ecosystem to grow significantly.

Regulatory Framework

The regulatory environment for FinTechs has developed in recent years in tandem with the industry's rapid expansion. McCarthy Tetrault partner Sonia Struthers notes that "heightened regulatory clarity and scrutiny, more institutional acceptance, and industry consolidation" have taken place in recent years. Securities authorities have clarified and taken enforcement action on how securities rules relate to crypto-asset trading. According to the Ontario Securities Commission (OSC) in Canada, the trading of crypto-assets is subject to strict regulations.

An open banking system should be adopted within 18 months, according to the final report from the Advisory Committee on Open Banking. Bitcoin exchange-traded funds (ETFs) have been booming in Canada since the world's first ETF was approved in 2013. 

FinTechs should be wary of greater exposure to regulatory obligations, fines, and legal action, even when the prognosis for the sector seems good. When it comes to the retail and crypto markets, "legal clarity is a critical concern for market players as we have seen authorities beginning to shift to a more active position." There has been a rise in the amount of legal ambiguity as a result of greater regulatory action via enforcement and supervision." He goes on to say that "regulators must have a tight relationship with the sector to foster innovation while also protecting consumers."

Alison Manzer, an attorney at Cassels Brock & Blackwell, LLP, sees FinTech as a way to comply with existing rules in the financial industry. Second, she sees FinTech as a way to regulate activities that don't fall under present regulatory oversight. Anti-money laundering (AML) regulations, for example, may help the industry by adopting digital solutions to regulatory demands, writes the author. As the FinTech industry expands, compliance rules must be adjusted to accommodate the new solutions that are being created." 

Reducing the regulatory burden on FinTechs by recognizing what is specifically a digital strategy, rather than adding financial services to the regulatory system, helps by not exceeding compliance standards. This does not necessarily need regulation for activities that are now unregulated, she says. Going into the future, FinTechs must ensure that they are fully compliant. 

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