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FinTech goes mainstream

14 August 2022

During the previous years we tended to refer to fintech, as a niche market, which concerned a small minority of consumers. But this is changing. Not at a low pace, as some might have expected but at a rapid one. Not only in the emerging markets, where fintech services are the basic tool for underserved and underbanked population to be financially included but all over the world. Adoption of fintech services has moved steadily upward.

According to a recent report of EY, “Global FinTech Adoption Index 2019”, fintech has caught on around the world, entering the mainstream in all markets studied. The EY survey found that fintech adoption in 2019 has reached 64{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e}, growing faster than anticipated. Adoption rates rose from 16{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} in 2015, to 33{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} in 2017, to 64{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} in 2019, an increase of almost 100{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} every two years. What is really impressive is that global adoption rate of 64{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} exceeds by 12 points the 52{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} future adoption rate predicted by EY’s 2017 survey.

Emerging markets are leading the way: in both China and India, the adoption rate is 87{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e}. Close behind are Russia and South Africa, both with 82{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} adoption. Among developed countries, the Netherlands, the UK and Ireland lead in adoption, reflecting in part the development of open banking in Europe. Indicatively, the adoption rate for the six markets from our first survey — Australia, Canada, Hong Kong, Singapore, the UK and the US — has surged from 16{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} in 2015, to 31{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} in 2017, to 60{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} in 2019.

The numbers are more impressive in terms of consumer’s awareness. “Only 4{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} of global consumers reported they were unaware of fintech money transfer and payment services” the report notes. In some markets, the figure was even lower: in both India and Russia, just 0.5{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} of respondents said they were unaware of such services. Globally, 89{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} of consumers are aware of the existence of in-store mobile phone payment platforms and 82{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} are aware of peer-to-peer payment systems and non-bank money transfers. Services that are all driven by fintech.

 

Signs of maturation

For EY’s analysts, one telling sign of the fintech industry’s maturation is the evolution in consumer priorities when they look for a provider. Two years ago, 30{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} of adopters ranked the ease of opening an account as their top priority when selecting a fintech provider, while only 13{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} said attractive fees or prices were most important. In the 2019 survey, the priorities flipped, with 27{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} ranking price first and 20{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} picking ease of opening an account.

Source: Global FinTech Adoption Index 2019, EY

 

At the same time, fintech challengers show similar signs of maturation. Those challengers are “having a growing influence on the market, actively driving legacy and non-financial organizations to develop their own fintech products and services” EY’s report notes.

“Looking ahead, newly developing ecosystems will encourage industry convergence as FinTech challengers continue to mature, as more incumbents offer credible FinTech services, and as non-financial services companies expand their customer offerings into financial services” EY’s analysts conclude.