Apart from enhancing the process efficiency in fintech, GenAI has reflected dedicated customer services.
As adoption grows, it’s altering various aspects, such as fraud detection and market analysis. The financial business is being re-engineered, and such technology supports strategic decisions.
Global Generative AI in Fintech Market by Component (Service and Software), Deployment (On-Premises and Cloud), Application (Credit Risk Assessment, Chatbots, Fraud Detection, Market Prediction, Algorithmic Trading, Other Applications), Region and Companies – Industry Segment Outlook, Market Assessment, Competition Scenario, Trends, and Forecast 2024-2033.
Exploring Generative AI in Fintech Market
The Global Generative AI in Fintech Market size is expected to be around USD 16.4 Billion by 2032, from USD 1.1 Billion in 2023, with a CAGR of 31% for the forecast period from 2024 to 2033.
Generative AI is one technology that enables machines to generate original content. Now, this would shake things in the fintech space, for sure. Generally, fintech-or more precisely, the application of technology within the financial sector-is an ideal area for a technology such as this one to flourish. It could literally change the gamut of different functions in finance-from risk assessment and the detection of fraud through customer services to designing investment strategies.
The pace in the Fintech market of Generative AI has been tremendous as AI is advancing and also deployed in all mainstream financial services. For this reason, Generative AI is altering the core business of fintech through the possibility of creating ever more intricate financial models, the potential of having a better prognosis over market trends, and the provision of personalized experiences to customers.
Growth factors can be accounted for by increased demand for automated financial advisory services, improved systems in fraud detection, and stronger customer service. What is more, the synthesis of AI and blockchain along with other emerging technologies provides new spaces for innovations and growth.
However, there are a few challenges that the market has to face. Data privacy concerns, meeting all the regulatory requirements, and high costs related to AI solutions majorly hinder its growth; thus, financial institutions need to address them fully to derive the maximum benefits of generative AI.
Opportunities abound in the market, despite challenges. Generative AI in fintech may help manage risks better, enhance trading strategies, or fast-track loan approvals. The rising trend in the direction of digital banking and AI in financial planning and investment management are brighter outlooks for companies in this space. Going forward with technology advancement, the Generative AI in Fintech market is certainly going to grow.
The Global Generative AI in Fintech Market is expected to grow to around USD 16.4 billion by 2032 from USD 1.1 billion in 2023, with a healthy CAGR of 31% over the forecast period between 2024 and 2033.
- In 2023, the Software segment was a dominant market share holder with over a 61% share of the Generative AI in Fintech market.
- In the year 2023, the Cloud sector was ahead with an impressive 72% market share.
- Also, the Fraud Detection segment proved to be one of the strong applications of the Generative AI in Fintech market in 2023, with more than a 25% market share.
- North America captured over 36.5% share with $0.4billion revenues thereby retaining the top spot in the Generative AI in Fintech market till the end of 2023.
- For enhancing their services and operations, approximately 82% financial companies are identifying the feasibility of Generative AI solutions.
- Banks and financial companies, by applying Generative AI to customer service and personalization, should increase their customer satisfaction scores by 20% by 2024 .
- The ability to produce fewer false positives in AML and fraud detection can result from the integration of Generative AI in fintech by 50% by 2024.
- Generative AI in fintech enhances credit risk assessment models by up to 25% in terms of accuracy, hence lending decisions are made with much better accuracy.
Regulatory compliance and reporting require a solution in Generative AI, whose demand may grow up to 40% this 2023.
- The use of Generative AI in financial trading and portfolio management may improve the returns from investment, ten percent better one, by 2024.
- Generative AI adoption in the fintech sector will create up to ~1 million new jobs globally by 2025, including AI development, data analysis, and financial advisory services, as estimated by Gartner.
- With the integration of Generative AI in Cybersecurity, by 2024, data breaches and cyber attacks are expected to decrease by 30% in the financial industries.
- Operations cost will reduce by 25% by 2024, with the integration of insurance underwriting and claims processing using Generative AI.
The Software segment therefore held the largest share in the Generative AI in Fintech market in 2023, with more than a 61% market share. This is because software solutions play a significant role in deploying AI capabilities across financial services.
The software forms the core part of every application pertaining to AI since they provide the essential algorithms and necessary frameworks for computation, which enable the machine learning model to perform various analyses over large datasets, make predictions, and automate the process of decision-making.
The demand for software in the Generative AI sector is robust and arises from its ability to make the operations of financial institutions lean and efficient. For example, AI-driven software may automate all monotonous work, such as customer verification, risk assessment, and compliance checks, which traditionally consumes considerable time and resources.
More importantly, these software solutions are continuously evolving with advanced analytics that provide a deeper insight into customer behavior than was previously possible, making them useful for the development of more targeted financial products and services. The scalability and adaptability of the Software segment also help to ensure its leading position with rapid integration and customization based on specific organizational needs.
With evolving financial technologies and demand from companies for innovative software solutions aimed at leveraging generative AI in terms of gaining competitive advantage, this area will build to be in the lead in the market.
