FinTech adoption rate has grown to 64% globally with 96% aware of at least one service
FinTech adoption rates rose to an average of 64% this year according to EY Global FinTech Adoption Index 2019. Emerging markets are leading the way with both China and India at 87%. Close behind are Russia and South Africa, both with 82% adoption. Among developed markets, the Netherlands (73%), the UK (71%) and Ireland (71%) lead in adoption, reflecting in part the development of open banking in Europe.
The third iteration of the index is based on an online survey of more than 27,000 digitally active consumers in 27 markets. This year it also includes a survey of 1,000 small and medium enterprises (SMEs) using FinTech services in China, the US, the UK, South Africa and Mexico.
Gary Hwa, EY Global Financial Services Markets Executive Chair and EY Asia-Pacific Financial Services Leader, says: “The FinTech industry has grown up and grown out. The adoption rate is growing faster than anticipated. One of the reasons for strong growth is that traditional financial services companies have entered the fray in a big way.’’
Money transfers and payment services driving awareness
Globally, an average of 89% of consumers are aware of the existence of in-store mobile phone payment platforms and 82% are aware of peer-to-peer payment systems and non-bank money transfers. Availability of these FinTech services is even more accentuated in both India and China with 99.5% of consumers aware of money transfer and mobile payment services.
Changing customer priorities
According to the EY Global FinTech Adoption Index 2019, customer expectations have evolved, resulting in disruption and innovation in the financial services industry. Traditional banks, insurers and wealth managers are disrupting their own propositions by offering digitally accessible and technology-forward services.
Findings from the index showed that 27% ranked pricing as their top priority and 20% picked the ease of opening an account while choosing a FinTech service.
In markets such as Chile, France and Japan, trust is the only factor for not choosing a FinTech challenger over traditional financial institutions.
SMEs - a distinct and fast-growing customer segment
SME adopters have greatly influenced the FinTech evolution and have played a major role in bringing it to the mainstream. Adoption is highest in China at 61%, followed by the US at 23%.
As the current adopters are expected to continue using FinTech and additional companies are envisioned to be added in the list of adopters, the global adoption rate could surge from an average of 25% to 64% very soon.
Hwa says, “No longer just disrupters, FinTech challengers have grown into sophisticated competitors, with an increasingly global reach. The interactions between challengers, incumbents and players from outside the financial services industry are forming FinTech ecosystems that are replacing traditional bilateral partnerships.”
About the study
The report, now in its third year, is based on an online survey of more than 27,000 consumers in 27 markets. The consumer survey is based on online interviews with digitally active adults between 4 February and 11 March 2019. The aim was to get a global understanding of FinTech adoption trends between markets, demographic groups, and over time. We interviewed consumers in Argentina, Australia, Belgium and Luxembourg (treated as one market), Brazil, Canada, Chile, China (mainland), Colombia, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Mexico, the Netherlands, Peru, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, the UK and the US.
This year it also includes an index based on small and medium enterprises (SMEs) using FinTech services – a survey of 1,000 companies in China, the USA, the UK, South Africa and Mexico.
The 2015 study had 10 FinTech services within five broad categories, and we defined a FinTech adopter as someone who used two or more of these services. In 2017, in recognition of how the industry had evolved, we added seven services that were becoming more prevalent globally (although not necessarily in all our markets). To improve compatibility among the surveys, we introduced the concept of “buckets” and grouped similar services together. Therefore, a FinTech adopter was someone who used two or more buckets.
The 2019 study retains the same five categories used in prior years: money transfer and payments, budgeting and financial planning, savings and investments, borrowing, and insurance. There are now 19 individual services. However, by maintaining the same ten buckets that we used in 2017, we helped year-on-year comparisons. We have also recognized that some of these services are the “disrupted” services historically been offered by traditional financial providers, and some are “invented” services originated by FinTech challengers and enabled by technology.
As with prior years, during the interviews, we described each FinTech service in non-technical terms and provided named, market-specific providers of those services to aid the respondents’ comprehension.
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