The financial services industry continues to undergo rapid digital transformation, driving significant growth in the Fintech-as-a-Service (FaaS) market. According to a report by The Business Research Company, the global FaaS market expanded from $327.51 billion in 2023 to $386.39 billion in 2024, marking an impressive compound annual growth rate (CAGR) of 18%. Forecasts indicate that this market will further grow to $745.53 billion by 2028, sustaining a CAGR of 17.9%.
This growth is attributed to advancements in artificial intelligence, open banking, blockchain technologies, and the globalization of financial services. Emerging trends include embedded finance, API ecosystem expansion, regulatory technology solutions, and innovations in payment systems.
Digital banking has been a crucial driver of this transformation, bolstered by widespread mobile and internet adoption. The role of FaaS in enabling online banking platforms and AI-driven financial tools has been pivotal. Notably, a report from Finder.com highlighted that in 2022, 93% of UK residents used online banking, with digital-only bank account holders expected to rise to 43% by 2028.
Major industry players are leveraging technological innovations to strengthen their competitive edge. For example, Valley National Bank introduced a fintech innovation platform in April 2023, allowing fintech firms to develop and test solutions in a secure environment using synthetic data.
