FinTech services poised for mainstream adoption on a global scale — EY study
KUCHING: Levels of financial technology ( FinTech) adoption among consumers has surged globally over the past 18 months and is poised to be embraced by the mainstream, according to the latest EY FinTech Adoption Index. An average of 33 per cent of digitally active consumers across the 20 markets in the EY study now use FinTech.
The study, based on 22,000 online interviews with digitally active consumers across 20 markets, shows that the emerging markets are driving much of this adoption. The average adoption among digitally active consumers across China, India, South Africa, Brazil and Mexico is 46 per cent.
China and India in particular have seen the highest adoption rates of FinTech at 69 per cent and 52 per cent of respondents, respectively. FinTech firms in these countries are particularly successful at tapping into the techliterate but financially underserved segments, according to the study.
The UK has also shown significant growth, with adoption rates now standing at 42 per cent.
The EY FinTech Adoption Index evaluates services offered by FinTech organizations under five broad categories – money transfers and payments services; financial planning; savings and investments; borrowing; and insurance.
It reveals that money transfers and payments services are continuing to lead the FinTech charge with adoption standing at 50 per cent in 2017, based on the consumers that were surveyed. Eighty- eight percent of respondents said they anticipate using FinTech for this purpose in the future. The new services that have contributed to this upsurge include online digital- only banks and mobile phone payment at checkout.
Insurance has also made huge gains, moving from being one of the least commonly used FinTech services in 2015 to the second most popular in 2017, now standing at 24 per cent of respondents. According to the study, this has largely been due to the expansion into technologies such as telematics and wearables ( helping companies to better predict claim probability) and in particular the inclusion and growth of premium comparison sites.
Imran Gulamhuseinwala, EY Global FinTech Leader, said fintechs are clearly gaining widespread traction across global markets and have achieved the early stages of mass adoption in most countries.
“The EY FinTech Adoption Index finds, on average, one in three consumers already consume FinTech services on a regular basis.
“FinTechs, particularly in the payments and insurance space, have been very successful in building on what they do best – using technology in novel ways and having a laser-like focus on the customer. It really is now a critical time for traditional financial services companies.
“If they haven’t already, they need to urgently reassess their business models to ensure they learn how to meet their customers’ rapidly changing needs. Disruption is no longer just a risk – it is an undisputable reality.”
According to the study, 40 per cent of FinTech respondents regularly use on-demand services (e.g., food delivery), while 44 per cent of FinTech users regularly participate in the sharing economy (e. g., car sharing). In contrast, only 11 per cent of non-FinTech adopters use either of these services on a regular basis.
The demographic most likely to use FinTech are millennials – 25 to 34 years old, followed by those 35 to 44 years old. The study revealed that respondents in this age range are comfortable with the technology and that 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.
There is however also growing adoption among the older generations: 22 per cent of digitally active respondents 45 to 64 years old and 15 per cent of those older than 65 said they regularly use FinTech services.