FinTech adoption in India exceeds global averages
FinTech firms in India have been successful in driving usage among the techliterate population in small and medium cities
Levels of financial technology (FinTech) adoption among digitally active Indian consumers has surged over the past two years with an adoption rate of 52% as against 33% adoption globally, says the EY FinTech Adoption Index. FinTech firms in India are particularly successful driving usage among the tech-literate population even in small and medium cities.
Usage is significantly high in large cities with a 66% adoption rate followed by 51% usage and adoption in small and medium cities.
Rural India lags at 33% which is expected to change over the next few years on account of several digital initiatives undertaken by the Government to drive financial inclusion and direct delivery of benefits.
The EY FinTech Adoption Index 2017 however indicates that as adoption increases, and traditional players start to address the inefficiencies exposed by FinTech, consumers are likely to start demanding ‘bank grade’ services including 24x7 access, attractive rates and fees, etc.
Payment services and insurance are driving adoption
Money transfers and payments services leading the charge in India with adoption standing at 72% in 2017, based on the consumers that were surveyed.
FinTech players now cover the entire payment value chain, including pre-paid instruments or wallets, bill payments, peerto-peer payments (remittance), merchant payments and payment processing or gateways. Key drivers driving the payments space are minimalist user experience, interoperability and real time processing, and valueadded functionalities such as offers, loyalty and credit at point of sale.
Insurance is the next popular category with an adoption rate of 47%, much higher than the global average of 24%.
This has largely been due to the concerted efforts of insurance companies towards adopting digital for servicing policies and the growing preference of consumers for comparison shopping.
The expansion into technologies such as telematics and wearables (helping companies to better predict claim probability) will help to fuel the next wave of growth.
Mahesh Makhija, Partner, Financial Services Advisory Services, EY India, said, “The EY FinTech Adoption Index finds, more than half of the sampled Indian consumers claim to have used over two FinTech products in the last six months. FinTechs, particularly in the payments and insurance space, have been successful in building on what they do best – using innovative technology with laser-like focus on the customer.
Disruption is now a reality. It is now critical for traditional financial services companies to reassess their business models to ensure they learn how to meet their customers’ rapidly changing needs.”
FinTech adoption is highest in the 2534 age bracket
India mirrors global trends in the adoption statistics by demographics. The demographic most likely to use FinTech are millennials – 25 to 34 years old, followed by the 35 to 44 year old.
Respondents in this age range are comfortable with technology and they also require a wide range of financial services as they achieve milestones such as completing their education, gaining full-time employment, becoming homeowners and having children.
The key reasons for increased adoption have been the ease of setting up accounts (31%) when compared with the traditional financial services, access to a wide range of offerings (19%) with quality service (13%).
There is however also growing adoption among the older generations: 56% of respondents between 55 to 64 years old and 27% of those between 65-74 years said they regularly use FinTech services.
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