Financial Technology services poised for mainstream adoption on a global scale with 1 in 3 digitally active consumers using FinTech
Singapore, 18 July 2017
- Consumers in China show highest level of FinTech adoption, with 69% of respondents regularly using these services
- Singapore’s FinTech adoption increased from 15% in 2015 to 23% in 2017
- Half of global consumers (50%) use FinTech money transfer and payments services
Levels of financial technology (FinTech) adoption among consumers has surged globally over the past 18 months and is poised to be embraced by the mainstream, according to the latest EY FinTech Adoption Index. An average of 33% digitally active consumers across the 20 markets in the EY study now use FinTech.
The study, based on 22,000 online interviews with digitally active consumers across 20 markets, shows that the emerging markets are driving much of this adoption with China, India, South Africa, Brazil and Mexico averaging 46%.
China and India in particular have seen the highest adoption rates of FinTech at 69% and 52%, respectively. FinTech firms in these countries are particularly successful at tapping into the tech-literate but financially under-served segments, according to the study. In Singapore, FinTech adoption, while being lower than the global average, saw an increase from 15% in 2015 to 23% in 2017.
Liew Nam Soon, EY Asean Financial Services Managing Partner, Ernst & Young Advisory Pte. Ltd. says:
“While FinTech adoption levels in Singapore are lower than the global average, the ground work has been laid and its anticipated penetration will increase across all categories in the next twelve months, with the highest growth expected from borrowing platforms and financial planning tools. The lower adoption levels doesn’t mean that Singapore consumers are not open to FinTech innovation. On the contrary, it reflects the efforts of traditional banks working with FinTech start-ups, which gives consumers fewer reasons to go directly to the FinTechs, unless it’s a brand new innovation or value proposition.”
Payment services and insurance are driving adoption
The EY FinTech Adoption Index evaluates services offered by FinTech organizations under five broad categories – money transfers and payments services, financial planning, savings and investments, borrowing and insurance. It reveals that money transfers and payments services are continuing to lead the FinTech charge with global adoption standing at 50% in 2017, based on the consumers that were surveyed. 88% of global respondents said they anticipate using FinTech for this purpose in the future. The new services that have contributed to this upsurge include online digital-only banks and mobile phone payment at checkout.
Insurance has also made huge gains, moving from being one of the least commonly used FinTech services in 2015 to the second most popular in 2017, now standing at 24%. According to the study, this has largely been due to the expansion into technologies such as telematics and wearables (helping companies to better predict claim probability) and in particular the inclusion and growth of premium comparison sites.
Imran Gulamhuseinwala, EY Global FinTech Leader, says:
“FinTechs are clearly gaining widespread traction across global markets and have achieved the early stages of mass adoption in most countries. The EY FinTech Adoption Index finds, on average, one in three consumers already consume FinTech services on a regular basis. FinTechs, particularly in the payments and insurance space, have been very successful in building on what they do best – using technology in novel ways and having a laser-like focus on the customer. It really is now a critical timefor traditional financial services companies. If they haven’t already, they need to urgently reassess their business models to ensure they are able to meet their customers’ rapidly changing needs. Disruption is no longer just a risk – it is an undisputable reality.”
In Singapore, a similar trend is observed. Money transfers and payments (38%) and savings and investments (17%) saw good penetration in the market, though adoption of borrowing (3%) and financial planning services (4%) were particularly low.
Nam Soon says:
“We anticipate that payments, and savings and investments will continue to see strong growth in Singapore. This is evident in the number of FinTechs that are establishing themselves in this space. The Monetary Authority of Singapore’s recent consultations around single payment infrastructure and robo-advisors will further facilitate the provision of services targeted at the middle income group.”
FinTech users are also actively using the sharing economy and on-demand services
According to the study, 40% of FinTech users regularly use on-demand services (e.g. food delivery), while 44% of FinTech users regularly participate in the sharing economy (e.g. car sharing). In contrast, only 11% of non-FinTech adopters use either of these services on a regular basis.
The demographic most likely to use FinTech are millennials – 25–34-year olds, followed by 35–44-year olds. The study revealed that people in this age range are comfortable with the technology and that they also require a wide range of financial services as they achieve milestones such as completing their education, gaining full-time employment, becoming homeowners and having children.
There is however also growing adoption among the older generations: 22% of digitally active 45–64-year olds and 15% of those over 65 said they regularly use FinTech services.
The study has also identified a new segment of users, the ‘super-user’. These individuals use five or more FinTech services and account for 13% of all consumers. ‘Super-users’ generally consider FinTech firms to be their primary providers of financial services.
Like the global average, the tech-savvy younger generation (25-34 year olds) is the demographic most likely to use FinTech. They are also high adopters of all FinTech services among the Singapore population.
FinTech adoption set to increase to 52% globally
The EY FinTech Adoption Index says that FinTech adoption is set to increase in all 20 markets covered by the study. Based on consumers’ intention of future use, FinTech adoption could increase to an average of 52% globally. The highest proportional increases of intended use among consumers is expected in South Africa, Mexico and Singapore.
Nam Soon says:
“In Singapore, we anticipate adoption to increase to 56% with more usage by not just the millennials but the older generation, as awareness increases and the users gain greater comfort towards conducting financial transactions digitally. This is not surprising, given the vibrant FinTech ecosystem – support from consumers, access to talent and capital, and governance. For financial institutions and FinTech collaborations to be successful, FinTech companies must be able to get access to customers and scale to build a sustainable business model. To do so often requires partnerships with financial institutions or businesses with an existing large customer base and adequate support in investment funding.”
In this regard, as part of the Singapore FinTech Festival, there will be an Investor Summit – “Deal Day”, powered by EY on 17 November 2017. Targeted at promising FinTechs and interested investors, there will be a personalized matchmaking process to facilitate the best fit for both parties in the lead up to the Deal Day.
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About the study
The study is based on over 22,000 online interviews with digitally active consumers (i.e. those who use the internet) across 20 markets – Australia, Canada, Hong Kong, Singapore, the UK, US, China, India, South Africa, Brazil, Mexico, France, Spain, Switzerland, Germany, Ireland, Japan, Netherlands, South Korea and Belgium / Luxemburg (considered as one market for this analysis). The study was conducted by EY-Sweeney.
A regular FinTech user is defined as an individual who has used two or more FinTech services in the last six months.
Following the widespread interest in the first study (2015), the scope and scale of the research has expanded significantly. The 2015 study was based on 10,131 interviews with digitally active consumers across 6 markets: Australia, Canada, Hong Kong, Singapore, the UK and US.
Also reflecting the rapid growth and maturation of the FinTech industry, EY’s Adoption Index has grown from the original 10 FinTech services included in the 2015 survey to 17 types of service this year (further details in the table below). Respondents were asked only about services from non-traditional providers, and brand names of established FinTechs in each market were used to aid with comprehension. EY has also broken out one of the categories from the 2015 study, so there are now 5 categories. To stay consistent in the report, we then recalculated the 2015 results across those 5 categories.
About the Singapore FinTech Festival
Organized by the Monetary Authority of Singapore in partnership with The Association of Banks in Singapore and in collaboration with SingEx Holdings, the Singapore FinTech Festival will provide a platform for collaborations, connections and co-creations within the FinTech ecosystem in Singapore and beyond. In keeping with this spirit, the Festival is supported by the industry.
A series of back-to-back events that will take place from 13 – 17 November 2017. The Festival will comprise the Global FinTech Hackcelerator, Innovation Lab Crawl, FinTech Awards, FinTech Conference, and Investor Summit.