Out of 10,131 digitally active consumers in Australia, Canada, Hong Kong, Singapore, the UK and the US, 15.5 per cent have used at least two FinTech services – which are defined as financial services products developed by non-bank, non-insurance, online companies – in the past six months, according to research from EY.
EY’s FinTech adoption index also suggests that the adoption rates could double in the next 12 months if the survey’s respondents follow up on their initial intention of using the FinTech services.
The Index evaluates the use of non-bank platforms in four categories: savings and investments; money transfer and payments; borrowing; and insurance.
There are ten FinTech services that include P2P platforms for investments; equity or rewards crowdfunding; online savings advice and investments; online financial planning; online stock broking or spread betting; online ForEx; overseas remittances; non-bank money transfers and borrowing using P2P platforms.
Imran Gulamhuseinwala, EY Global FinTech Leader, said, “The adoption of FinTech products is relatively high for such a new sector, so the risk of disruption is real. As FinTech continues to catch on among consumers, traditional financial services companies will have to reassess their view of which customers are most at risk from the new competition and step up their efforts to serve them effectively.”
Out of all the products surveyed in the market, payment services have the highest adoption rate (17.6 per cent). Services in this category include the use of non-bank providers to make online payments, online foreign exchange, and overseas remittances.
The early adopters tended to be younger, more affluent 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 per cent), followed by those aged 35 to 44 (21.3 per cent), and those aged 18 to 24 (17.7 per cent).
The highest earners, those with wages of over $150,000, also proved to be the most eager to adopt (44.1 per cent).
“Higher-income individuals are some of the most economically valuable customers for banks and insurers. These organisations will have to review how their offerings, such as their own multi-channel strategies or partnerships with fintech providers, meet their customers’ needs. Otherwise, they may have difficulty stemming the flight to fintech,” said Steven Lewis, global lead banking analyst at EY.
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