FinTech services go mainstream worldwide: EY

FinTech services have hit the mainstream according to the latest EY FinTech Adoption Index.

The study, based on 27,000 online interviews across 27 markets, revealed that China and India are in pole position in terms of FinTech usage, with 87 per cent of the population now using such services, closely followed by Russia and South Africa, both with 82 per cent.

The UK has an adoption rate of 71 per cent, well ahead of the USA (46 per cent), France (35 per cent) and Japan (34 per cent) as well as more than Germany (64 per cent).

Tom Bull, EY UK’s FinTech leader, said that the UK’s leading position amongst large, mature economies reflects London’s role as a FinTech global hub and the resilience of the sector amongst broader Brexit uncertainty.

“We expect to see increased adoption in the UK as established financial institutions work on more FinTech services either through partnerships, acquisitions or in-house development,” he continued, adding: “The introduction of Open Banking and PSD2 in the UK hasn’t yet created the rapid take-off of use predicted, but it is still early days.”

The research showed that consumers are not discerning about sticking to one FinTech services provider, with more than a third (36 per cent) of Chinese and nearly a quarter (23 per cent) of UK consumers using five or more FinTech providers for different services.

In terms of what consumers look for in a provider, this year's survey found that a global average of 27 per cent of consumers prioritise price, while 20 per cent value the ease of opening an account – a shift from EY's findings in 2017, when ease of access was the top priority for 30 per cent of users.

Money transfers and payments services are continuing to lead the FinTech charge, with use of one or more services standing at 75 per cent in 2019, while an average of 96 per cent of respondents are aware of such services.

InsurTech services have also expanded rapidly, with an average of nearly half of global consumers (48 per cent) using a premium comparison site, feeding information into an insurance-linked smart device or buying products such as peer-to peer insurance. The rise of telematics in car insurance and app-based health apps are two standout trends in this market segment, EY noted.

The research also demonstrated the proliferation of FinTech services beyond financial services companies. EY found that a global average of 68 per cent of consumers are willing to consider using such services, particularly those offered by retailers (45 per cent) and telecoms providers (44 per cent per cent). Digital only banking and multi-merchant e-wallets are consumers’ preferred services from non-financial companies.

Over the past six months, an average of one in four global small to medium-sized enterprises (SMEs) has used FinTech services in all four categories assessed - banking and payments, financial management, financing and insurance. More than half of SMEs worldwide have used banking and payments services, making it the most widely used category.

EY’s survey forecast that the FinTech adoption rate among SMEs is poised to rise: an average of 22 per cent of non-adopters already use FinTech services in three of the four categories required to be classified as an adopter. When asked about planned use of FinTech services over the coming year; by that measure, the global SME adoption rate could surge from 25 per cent to 64 per cent in the next 12 months.

Bull concluded that in emerging markets, in the absence of more developed financial institutions and infrastructure, challengers are building products and services supporting FinTechs from the ground up. “FinTechs are addressing the needs of SMEs in their day-to-day business management, where tools such as online accounting, digital billing systems and payment processors are revitalising smaller companies’ capacity to focus on growing their business.”

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