U.S. Fintech: The Current State of Play

The U.S. fintech landscape remains a dynamic and unique market, as highlighted by the recent FinovateFall event in New York, as stated in Fintech Futures. Known for its quick-paced demos, the event showcased a broad spectrum of financial technology innovations, with 65 companies presenting solutions across various sectors, from regtech to payments. The diversity was striking, and AI played a significant role, although only two out of the eight ‘Best of Show’ winners were AI-driven.

The U.S. fintech sector has been a global leader, accounting for almost half of global funding deals in 2023. However, the country’s vast financial ecosystem, with over 10,000 institutions, makes implementing change a slow process. According to Philip Benton, fintechs have pressured banks to modernize more quickly, with events like FinovateFall showcasing the latest trends.

Despite AI’s growing presence, the real focus at FinovateFall was on risk management and regulatory technology (regtech). «Fintechs are a victim of their own success,» commented Kiah Haslett during a panel discussion on regulatory challenges. With Banking-as-a-Service (BaaS) under scrutiny, the need for third-party risk management is at an all-time high due to increasing cyber threats.

While AI continues to dominate discussions in fintech, its practical applications remain limited, often focusing on enhancing existing processes rather than replacing them. As Chris Brown, President of Intelygenz USA, remarked, «85% of AI projects fail… not because of immature technology, but because too many organizations get bogged down in hype rather than practical applications.» Virtual assistants are expected to be a key area of growth, generating $2.6 billion in revenue for IT vendors by 2028, according to Omdia’s research.

FinovateFall reaffirmed that despite economic challenges, U.S. fintech is thriving, with companies continuing to innovate and push boundaries.