Discover Global Network, a leading global payment network, released its third annual “Fintech State of the Union” (FSOU), a comprehensive study that provides insights about the fintech market in relation to venture capitalists and consumers. This study reveals key areas for growth, the importance of fraud prevention and security, and the increasing adoption of digital payments.
Fintech market study
Discover Global Network, a prominent player in the payment industry, recently unveiled the results of its third annual Fintech State of the Union (FSOU). In this article, we delve into the findings of the FSOU and explore the emerging trends in the fintech industry, highlighting the perspectives of various stakeholders.
The study offers a unique glimpse into the fintech market landscape by gathering insights from fintech companies, venture capitalists, and consumers. The research, conducted in partnership with 451 Research of S&P Global Market Intelligence, covers various sectors and highlights essential growth areas, the significance of fraud prevention, and the rise of digital payments.
Optimistic venture capitalists
Among other findings, Discover’s FSOU study reveals that the majority of U.S. venture capitalists are optimistic about the growth of the fintech market. They see significant opportunities in investments in capital markets technology, payment processing, and fraud prevention over the next five years.
Furthermore, more than half of venture capitalists believe that building strong relationships with payment networks is critical for the future of fintech companies. VCs are particularly interested in fintechs with experienced operating teams, proven customer traction, reliable founders, favorable valuations, and advanced technology capabilities.
Fraud prevention and security
Fintech companies emphasize the importance of payment and data security, with 59% considering it a highly relevant use case. They are also keen on partnering with payment networks to develop solutions for data payment security, card-less online payments, and commercial B2B payments. Consumer trust is paramount, with 67% citing the security of personal information as the most critical factor when using emerging payment methods.
Rise of digital payments
Despite a decline in consumer spending, the use of digital payments and e-commerce continues to rise. Nearly half of consumers have reduced discretionary spending, but 86% of them now use at least one digital payment service, marking a 17-point increase year-over-year.
In addition, online transactions have become the preferred channel for discretionary spending in the United States, surpassing in-store purchases. The study also highlights a shift in payment preferences, with tapping a card at checkout becoming the most often used method for in-person payments at businesses.
- Discover’s Fintech State of the Union study provides insights into the industry’s trends and the factors that will drive success.
- Venture capitalists in the United States are optimistic about the fintech market’s future, with a focus on investments in technology, payment processing, and fraud prevention.
- Fintechs prioritize payment and data security and seek partnerships with payment networks for developing secure payment solutions.
- Most consumers cite the security of personal information as the most critical factor when using emerging payment methods.
- Despite a decline in consumer spending, digital payments and e-commerce continue to rise, with online transactions now preferred over in-store purchases.