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, including India. 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.
Mahesh Makhija, Partner and Leader, Digital and Emerging Tech, EY, says: “The FinTech industry in India is rapidly expanding, and 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. The elevated awareness in India stems in part from the government’s plan, announced in 2017, to decrease the amount of paper currency in circulation.
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 while choosing a FinTech service and 20% picked the ease of opening an account.
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
SMEs 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.
Mahesh Makhija added, “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.”