In the emerging markets, Russia and South Africa are trailing closely behind China and India
France and Chile, trust was the main factor for not choosing a FinTech service over banks
The adoption of Fintech, short for financial technology, grew at 64% worldwide in 2019. While among the developed markets, the adoption rates were highest in Netherlands (73%), the UK (71%) and Ireland (71%) lead the charts, in emerging markets China and India are ahead with 87% adoption, claims EY Global FinTech Adoption Index 2019, published June 3.
“The FinTech industry in India is rapidly expanding, and the adoption rate is growing faster than anticipated. One of the reasons for strong growth is that traditional financial services companies have entered the fray in a big way," said Mahesh Makhija, Partner and Leader, Digital and Emerging Tech, EY in a press statement.
The report attributes the higher adoption of FinTech services in European markets to the open banking system in Europe, which allows consumers to carry out banking from third party solutions if they are not happy with the bank’s services. The third party solutions can be anyone from a social media platform or a payment wallet as long as they comply with EU’s GDPR laws.
In the emerging markets, Russia and South Africa (with 82%) are trailing closely behind China and India. About 99.5% of respondents in India and China were aware of money transfer and mobile payment services. In case of India, this awareness stems from the central government’s decision to decrease the amount of paper currency in circulation through demonetisation drive in 2017. The report further points out that traditional banks, insurance providers and wealth managers are switching to digitally accessible and technology-forward services.
Among the factors that encouraged or discouraged users from switching to a Fintech service, the report claims, 27% of the respondents chose a FinTech service for its pricing, while 20% chose services that had a simpler process for opening bank account. In Japan, France and Chile, trust was the main factor for not choosing a FinTech service over banks.
“FinTech challengers have grown into sophisticated competitors, with an increasingly global reach. The interactions between challengers, incumbents and players from outside the financial services industry are forming FinTech ecosystems that are replacing traditional bilateral partnerships," adds Makhija.
The findings of the report were based on an online survey involving over 27,000 digitally active consumers in 27 markets including India and an additional survey of 1,000 SMEs using FinTech services in China, US, UK, South Africa and Mexico.