6 FinTech Trends That Are Disrupting Traditional Banking
FinTech Adoption Has Grown from 16% to 33% Since 2015
In the past 2 years, the world has experienced a dramatic increase in FinTech adoption, especially in emerging markets like markets like Brazil, China, India, Mexico, and South Africa. Collectively, these countries boast a 46% usage rate, ahead of the world-wide trend of 33%. While the United States is often considered one of the technology leaders of the world, adoption is surprisingly only 33%.
50% of Consumers Are Now Using FinTech Money Transfer and Payment Services
The fight for money transfer and payment services is over as FinTechs have already reached a 50% saturation of the market. This trend will undoubtedly continue as banks struggle to integrate with other banks and vendors, and work to keep pace with fast and nimble FinTech startups that are only focused on a specific area of banking. Considering the fact that only 18% of people were using FinTech money transfer and payment systems just 2 years ago confirms the fact that banks have a long way to go if they hope to compete in this market.
FinTech Adoption is Indicative of a Larger Digital-First Trend
EY found that 64% of FinTech users prefer digital channels to manage all aspects of their life. What banks need to realize is that a digital transformation means creating ways for their customers to interact with them digitally for all aspects of banking. A partial or incomplete digital transformation will not be enough to satisfy the majority of FinTech users who want to see every aspect of their live accessible via digital means.
China is Leading the Way in FinTech Adoption
China leads the way across 4 of the top 5 FinTech categories including Money Transfer and Payments (83%), Financial Planning (22%), Savings and Investments (58%), and Borrowing (46%). The final category EY looked at, Insurance, is led by India with 47% adoption.
Millennials Are the Most Likely to Use FinTech
48% of 25-34 year olds are using FinTech platforms today, followed by 41% of 25-44 year olds. 18-24 year olds lag behind at only 37%, but that’s largely because they have less overall demand for the services that FinTechs offer (like financial planning). EY found that people 45 years old and above already have longstanding relationships with incumbent providers, which is the most difficult barrier to overcome in the age group.
People Who Use FinTech Platforms Are More Likely to Use On-Demand Services and Participate in the Sharing Economy
Understandly, FinTech users aren’t just checking their Mint account all day—40% are also regularly utilizing on-demand services like Uber and 44% are participating in the sharing economy (like bike-share programs). Comparatively, only 11% of non-FinTech users are engaged in these programs. EY highlights that this signals that FinTech users are more likely to be digital-first across many facets of their lives, especially when you look at usage of online content streaming (76%), messaging and video chat (66%) and social media (71%).
Still Plenty of Market for FinTech Adoption to Increase
EY concluded the study by projecting where FinTech usage will be in the future based on survey results. Despite high saturation in markets like China and India, there is still plenty of room for FinTech adoption to grow. Overall, EY projects that adoption across the world will grow from 33% to 52% in the near future with Mexico, Singapore, South Africe, Spain, Brazil, and the United States leading the way.
Looking to get more insights like this? Check out our 2017 State of Digital Sales in Banking report!