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EY: Financial Technology services poised for mainstream adoption on a global scale with 1 in 3 digitally active consumers using FinTech

EY: Financial Technology services poised for mainstream adoption on a global scale with 1 in 3 digitally active consumers using FinTech

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% 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 with China, India, South Africa, Brazil and Mexico averaging 46%.

China and India in particular have seen the highest adoption rates of FinTech at 69% and 52%, respectively. FinTech firms in these countries are particularly successful at tapping into the tech-literate but financially under-served segments, according to the study.

The UK has also shown significant growth, with adoption rates now standing at 42%.

Payment services and insurance are driving adoption

The EY FinTech Adoption Index evaluates services offered by FinTech organisations 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% in 2017, based on the consumers that were surveyed. 88% 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%. 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.

The study has also identified a new segment of users, the ‘super-user’. These individuals use five or more FinTech services and account for 13% of all consumers. ‘Super-users’ generally consider FinTech firms to be their primary providers of financial services.

FinTech adoption set to increase to 52% globally

The EY FinTech Adoption Index says that FinTech adoption is set to increase in all 20 markets covered by the study. Based on consumers’ intention of future use, FinTech adoption could increase to an average of 52% globally. The highest proportional increases of intended use among consumers is expected in South Africa, Mexico and Singapore.

Spyros Loizou, Head of IT Advisory and Cyber Security Services at EY Cyprus, says:

“The FinTech Industry is thriving and adoption is at an all-time high across the globe and especially in Europe and emerging markets. Consumers are demanding for alternative digital channels to make financial services activities as seamless as possible through innovative uses of emerging technologies. As with the global trends, financial services in Cyprus will need to adopt and embrace change in order to stay relevant and maintain customer proximity through digital channels. FinTech adoption is the only pragmatic option for laser focus, smart and to-the-point financial services offerings, online and through IoT in general. Traditional banks, slowly come to perceive that FinTech initiatives are strategic opportunities rather than a threat. Adoption means banks can focus on banking, while technologists and FinTechs can focus on bringing the customer closer by improving customer experience and facilitating the era of open Banking / open APIs.”

 

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