More than half of Australian consumers now active users of FinTech products and services
Tuesday, 11 June 2019
- 58% of digitally active Australians now use FinTech, compared to 37% in 2017
- China and India are the global leaders in consumer adoption, at 87%
- Globally, small and medium enterprises (SME) FinTech adoption is at 25%; with China leading at 61% followed by the US (23%)
More than half of digitally active Australians (58%) are now using FinTech products and services – up substantially from just 37% in 2017, according to the EY Global FinTech Adoption Index 2019 (Index). However, while FinTech use in the Australian market continues to rise, the pace of local adoption has slowed in comparison to emerging markets, with Australia now sitting slightly below the global consumer adoption average of 64%.
The latest Index found Mainland China and India have the highest rate of consumer FinTech adoption globally at 87%. Across the Asia-Pacific region, adoption rates have doubled, and in some cases even tripled, across key markets in just two years; with Hong Kong, Singapore, and South Korea all now sitting at 67%.
The third iteration of the Index is based on an online survey of more than 27,000 digitally active consumers in 27 markets, including Australia. This year, it also includes a survey of 1,000 SMEs using FinTech services in Mainland China, the US, the UK, South Africa and Mexico.
Meredith Angwin, Ernst & Young Australia FinTech advisor, said:
“While starting from a higher base than many other Asian markets, Australia has dipped under the global average in this year’s survey. Although our incumbent financial institutions have begun embracing FinTech, their current offerings in this space lag behind what we are seeing in some other markets and this has likely had an impact on our overall ranking. However, we expect this to change as more “challenger” fintechs continue to come into the local market and the major players step up their innovation agendas in order to remain competitive and address evolving consumer demands.”
Money transfers and payment services driving awareness
The Index also found that, globally, an average 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 Mainland China with 99.5% of consumers aware of money transfer and mobile payment services.
James Lloyd, EY Asia-Pacific FinTech and Payments Leader, said:
“Most Asian markets benefit from a powerful “fintech feedback loop”, with the increased adoption driving increased innovation – and vice-versa. As Mainland China continues to lead on consumer and SME-focused financial services innovation, the inspiration from Chinese fintechs is increasingly permeating across the region. This influence can be seen in the response of incumbent institutions seeking to build out their own fintech-inspired propositions, as well as increased regulatory support for non-traditional challenger players across banking, insurance, and wealth management.”
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 27% ranked pricing as their top priority and 20% picked the ease of opening an account while choosing a FinTech service. In Japan, trust is the only factor for not choosing a fintech challenger over traditional financial institutions.
“We’re also seeing an emerging trend towards industry convergence, with sector leaders in adjacent industries such as transport, retail, and telecommunications increasingly offering digitally enabled financial services. This is yet another area in which we believe that Asia will take a leading role, as they already have with FinTech innovation and adoption.”
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About the study
The report, now in its third year, is based on an online survey of more than 27,000 consumers in 27 markets. The consumer survey is based on online interviews with digitally active adults between 4 February and 11 March 2019. The aim was to get a global understanding of FinTech adoption trends between markets, demographic groups, and over time. We interviewed consumers in Argentina, Australia, Belgium and Luxembourg (treated as one market), Brazil, Canada, Chile, China (mainland), Colombia, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Mexico, the Netherlands, Peru, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, the UK and the US.
This year it also includes an index based on small and medium enterprises (SMEs) using FinTech services – a survey of 1,000 companies in China, the USA, the UK, South Africa and Mexico.
The 2015 study had 10 FinTech services within five broad categories, and we defined a FinTech adopter as someone who used two or more of these services. In 2017, in recognition of how the industry had evolved, we added seven services that were becoming more prevalent globally (although not necessarily in all our markets). To improve compatibility among the surveys, we introduced the concept of “buckets” and grouped similar services together. Therefore, a FinTech adopter was someone who used two or more buckets.
The 2019 study retains the same five categories used in prior years: money transfer and payments, budgeting and financial planning, savings and investments, borrowing, and insurance. There are now 19 individual services. However, by maintaining the same ten buckets that we used in 2017, we helped year-on-year comparisons. We have also recognized that some of these services are the “disrupted” services historically been offered by traditional financial providers, and some are “invented” services originated by FinTech challengers and enabled by technology.
As with prior years, during the interviews, we described each FinTech service in non-technical terms and provided named, market-specific providers of those services to aid the respondents’ comprehension.