Financial technology (fintech) adoption among consumers has nearly doubled over the past 18 months and the adoption rate is growing faster than anticipated, according to the latest EY Global FinTech Adoption Index.
Globally, 64% of digitally active consumers across 27 markets use fintech, with money transfer and payment services the most popular in both awareness and adoption.
Only 4% of global consumers are unaware of at least one money transfer and payment fintech service. Adoption rates continue to lag in the US, while Europe’s investments in open banking have contributed to higher adoption rates in that region.
“The emerging FinTech scene in Cayman is further evidence of the global interest in these innovative brands that are revolutionizing the financial services landscape,” said EY Advisory Partner David McGibbon. “As adoption rates increase, we expect further collaboration between FinTech and traditional financial services companies, and even non-financial services companies, creating a superior financial services experience for both consumers and businesses.”
EY firms interviewed more than 27,000 people to better understand how consumers are interacting with fintech.
Compared to consumers, small and medium-sized businesses are behind in their adoption.
A separate EY survey of more than 1,000 organisations in five countries found that one quarter have used at least one form of financial technology in either banking and payments, financial management, financing or insurance over the past six months.
“FinTech organisations are no longer fringe disruptors and have grown into sophisticated competitors,” said Matt Hatch, EY Americas FinTech leader. “Now, financial incumbents are taking note and offering FinTech solutions, forming ecosystems that are replacing traditional partnerships.”
The survey indicates that for consumers, trust plays a large role in fintech adoption, as non-adopters choose to remain with traditional financial services because they trust them more than fintech challengers.
Many fintech propositions also rely on data sharing, which can present a barrier for adoption.
Nearly half (46%) of adopters are comfortable with their primary banking institution sharing their financial data with other organisations if it means better offers on products or services.
But less than a quarter (23%) would share data with non-financial services companies. This trust gap creates a huge opportunity for financial institutions and fintech challengers. A third of adopters say they are willing to share data with fintech challengers.
Although non-financial services companies might lead innovation, they do not have full confidence when it comes to providing financial services.
Still, 68% of surveyed consumers are willing to consider a financial services product offered by a non-financial services company.
The SME FinTech Adoption Index found similar trends, with small and medium-sized businesses also more open to sharing data with fintech companies (89%) and other financial services companies (70%) than non-financial services companies (63%).