Results from a new EY survey of 10,000+ digitally active consumers.
The levels of financial technology (FinTech) adoption among consumers are set to grow significantly in the next year, a change that will require traditional financial services companies to revisit their customer service strategies to compete effectively with new market entrants, according to EY’s first FinTech Adoption Index.
Surveying 10,131 digitally active consumers in Australia, Canada, Hong Kong, Singapore, the UK and the US, our research found 15.5% have used at least two FinTech services — financial services products developed by non-bank, non-insurance, online companies — in the past six months. The findings also suggest that adoption rates among digitally active consumers could potentially double within the next 12 months if respondents follow up on their intentions to use FinTech.
We evaluated the use of 10 FinTech services in four categories: savings and investments; money transfer and payments; borrowing; and insurance. The 10 services include: peer-to-peer platforms for investments; equity or rewards crowdfunding; online investment advice and investments; online financial planning; online stock broking or spread betting; online foreign exchange; overseas remittances; non-bank money transfers; borrowing using peer-to-peer platforms; and health insurance premium aggregators or car insurance using telematics.
Most-used FinTech services
Percentage of digitally active customers who have used each product
Use of FinTech is greatest among younger, wealthier customers
Early FinTech adopters tend to be younger, higher-income customers. Respondents between the ages of 25 and 34 years old used at least two FinTech products in the past six months the most (25.2%), followed by those aged 35 to 44 (21.3%), and those aged 18 to 24 (17.7%). FinTech use is highest among consumers with incomes greater than US$150,000 (44.1%).
FinTech adoption is being led by a young, high-income population, but is set to grow across all demographic groups
FinTech users by age and income group
Adoption rates are higher in urban areas
Urban consumers tend to use FinTech at rates greater than the 15.5% average for all six regions surveyed. Online users in New York are more likely than users in the United States as a whole to use at least two FinTech services (33.3% in New York City compared to 16.5% for the US as a whole). The same is true of respondents in London who use online services (25.1% in London compared to 14.3% in the UK as a whole).
Hong Kong has the highest rate of FinTech use of all markets surveyed (29.1%). The US has the second-highest adoption rate (16.5%), followed by Singapore (14.7%), the UK (14.3%), Australia (13%) and Canada (8.2%).
Product awareness is the greatest obstacle
For digitally active respondents who have not used two or more FinTech products in the past six months, 53.2% say they were unaware the products existed, followed by 32.3% who say that they do not have a need to use the products, and 27.7% who prefer to use a traditional financial services provider, while 21.3% say they do not understand how the products work.
Trust has not been a major obstacle to FinTech use, with only 11.2% of respondents saying they do not trust FinTech products.
The EY FinTech Adoption Index shows that the innovations and changes of FinTech are here to stay. A co-existence and collaboration between the new and old market players will be inevitable. There is much that traditional financial services firms can learn from how FinTechs think about the customer proposition and harness technology to deliver a compelling service.
About the authors
|Imran Gulamhuseinwala is a financial services partner and EY’s Global FinTech Leader. He leads EY’s dedicated strategy and commercial advisory offering across Europe, the Middle East, India and Africa. He has overseen commercial due diligence exercises across all financial services subsectors, including in the FinTech space.|
|Tom Bull is a director in EY’s Financial Services Practice, with a particular focus on FinTech. He joined EY in 2003 and has experience advising on a wide range of M&A transactions including cross-border and domestic deals, working with both buyers and sellers. His clients include banks, private equity firms, marketplace lenders and other FinTech firms.|