It's difficult to know the precise size of the global financial services sector. The World Bank itself only collects data from 189 countries and estimates the rest. Moreover, the definition and scope of industries that fall within the financial services sector are not consistent among data sources. Furthermore, reporting is not that readily available on a regular basis or compiled on a global scale in specific financial sector terms. Also determining what numerical measurement is the best way to represent the size of a sector has been debated.
That being said, market estimates believe that by 2022, the financial services market is expected to reach $26.5 trillion, growing at a rate of 6% during the forecasted period. Asia-Pacific is the largest financial sector globally, followed by North America. The global banking sector is in better shape than it was 10 years ago, after the recession. The sector is expected to grow and shift to mobile and online banking as Millennials and Generation Z grow as participants in that sphere. This growth has led to an increase in startups and fintech companies looking to compete for a share of that business. In fact, fintech funding went up by 82% from 2017 to 2018.
Global market capitalization in 2019 was estimated to be approximately $90 trillion. The market capitalization of the global banking sector as of October 2019 was $7.9 trillion. This is the market cap for global banks but the metric will mainly measure publicly traded banks. It will not include information on private banks, smaller institutions, or fintech companies. Another statistic worth assessing is assets under management (AUM). AUM is a figure that captures the total amount of assets managed by an investment company for its clients. In 2017, in North America alone, AUM was $37.4 trillion. In 2018, it is estimated that the total assets of the banking industry were $124 trillion. Fintech funding in 2018 hit $32.6 billion.
Regarding insurance companies, they have continued to see growth, particularly in the Eastern part of the world. Global premiums in 2018 reached $5.2 trillion. It is expected that by 2029, Asia-Pacific will account for 42% of global premiums, with China making up 20% of that figure. As of 2018, the U.S. makes up 28% of world premiums and China makes up 11%.
Global gross domestic product (GDP) as of October 2019 was $90 trillion. Global GDP is broken down into three sectors for analysis: agriculture, industry, and services. In 2018, when global GDP was nearly $86 trillion, the breakdown by sector was 65% services, 25% industry, and 3% agriculture.
The Bottom Line
Though it is difficult to obtain specific figures on the size of the global financial services sector, the sector is a large part of any nation's economy. It consists of banks, investment firms, and insurance companies, all of which play a large role in the workings of an economy. The sector will only continue to grow through technological innovation and as developing countries continue to advance in how they structure these services for their countries.