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Case Study: The Landscape of Fintech in the USA
The amalgamation of finance and technology has caused a mighty uprise of technological developments that are steadily replacing traditional ways of money transfer and management. Thousands of fintech firms of all sizes and capabilities have emerged in the last few years, taking the growth trajectory of fintech from high to unparalleled.
One of the main contributors to the world of fintech is the United States of America.
The fintech landscape in the USA has made it a leader in the industry. Renowned technological hubs such as Silicon Valley, New York, Atlanta, etc., have been instrumental in making North America one of the most prominent hubs of fintech.
East Coast to West Coast
The USA boasts the highest number of fintech unicorns, which stands at 81 to date. The fintech hub in the USA is spread across the horizontal length of the country.
Silicon Valley, known as the largest technological hub in the world, is home to many behemoths of technology, like Apple, Google, Microsoft, etc. The ecosystem of the country and its historical connection with technology have been its biggest benefactors in rendering it the largest fintech hub in the world.
Along the West Coast, San Francisco and Los Angeles are the key contributors to the fintech industry. San Francisco tops the list of fintech hubs because of its invaluable resources, talent, competitors, and financial prowess. Big fintechs like Stripe, Chime, Plaid, Affirm, etc., have their base setup here.
The East Coast is rapidly becoming as important and massive as the West Coast. Cities like New York, Boston, Chicago, Miami, etc., have made the East Coast the third largest fintech hub in the world, after Silicon Valley and London. The reasons behind the East Coast becoming a prominent hub are similar to the West Coast, vis-a-vis, the availability of talent, financial power, inflowing investors, etc.
The Impact of The Pandemic
The catastrophic impact of the pandemic has been witnessed the world over. With strict nationwide lockdowns, limited supply of essentials, and imminent danger to life, the pandemic compelled the world to come to an unpredictable halt. The global economy’s sluggishness was caused by the intense damage and fear of uncertainties caused by the disease.
Most industries got heavily impacted because of inefficient supply chains and restricted movement of goods and money. Fintech was one of the few industries that not only shone in full bloom but also helped channel movements of goods, services, and money to get the system moving again.
The American fintech landscape, which was already leading the industry, became more powerful and reinforced by the growing demand for fintech-oriented solutions. 2021 saw an exponential rise in the venture capital funding of fintechs in the USA. The total sum of VC investments crossed $105 billion in 2021.
According to a report published by McKinsey, the percentage of fintech users and participants has grown to more than 40 post-pandemic, making fintech one of the mainstream industries. The adoption rate and awareness of fintech services and products have risen tremendously because of the high demand for alternatives to traditional banking and money management.
All fintech sub streams, such as payments, banking, investments, etc., have grown in popularity and adoption rates across the country. With more people exploring and accessing fintech-powered services and products, the adoption rates are strikingly higher than ever before.
Largest Fintechs in the USA
Thousands of fintechs have emerged and are continuously emerging in the fintech of the USA. With unceasing investments and unmatched expertise, the country has led some of the biggest innovations in the fintech industry. Some of the largest fintech companies that have their base set up in the USA are:
Stripe
With a valuation of more than $95 billion, Stripe has become the biggest fintech in the USA after Visa and MasterCard.
Klarna
Klarna is a market disruptor that has pioneered the BNPL (Buy Now, Pay Later) strategy and technology, currently valued at $46 billion.
FTX
Valued at $32 billion, FTX is one of the largest companies that cater cryptocurrency exchange services.
Chime
A digital bank with a valuation of $25 billion, Chime has been a game changer in the fintech industry.
Ripple
Another cryptocurrency and blockchain technology company that supplements digital remittances and payments via cryptocurrencies. The company currently values at $15 billion.
The Takeaway
Fintech in the USA is the epitome of success and innovation. Both the Coasts have become world leaders powering tech giants that have immensely influenced the ambit and evolution of fintech. The North American fintech hubs house big names like Plaid, Affirm, GoodLeap, etc. Apart from these giants, countless small and medium-sized startups are readily giving competition to well-established businesses worldwide. Owing to the massive availability of talent, technological expertise, resources, and competition, these fintech hubs have assumed the roles of unstoppable launching pads that support and fire upcoming companies. Because of its massive contribution to technology, finance, and several other industries, there is no question why the USA has earned the role of becoming a benchmark of technological prowess.
