Fintech set for further surge after leap in take-up

Levels of financial technology adoption among the general public have surged globally over the past 18 months, with the UK leading the way among developed nations, according to a new study.

EY said that one in three 'digitally active' consumers now use fintech on a regular basis. Picture: Shutterstock
EY said that one in three 'digitally active' consumers now use fintech on a regular basis. Picture: Shutterstock

One in three “digitally active” consumers is now using financial technology – or fintech – on a regular basis, following a sharp increase in take-up in both developed and emerging economies.

The latest EY FinTech Adoption Index – published today – reveals “significant growth” in the UK over the past 18 months, with adoption rates now standing at 42 per cent as more and more people embrace online banking and download apps to undertake a range of financial services.

The study, based on 22,000 online interviews with consumers across 20 markets, shows that emerging markets are driving much of this adoption with China, India, South Africa, Brazil and Mexico averaging 46 per cent, just ahead of the UK rate.

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China and India in particular have seen the highest adoption rates of fintech, at 69 per cent and 52 per cent respectively. Fintech businesses in these countries are particularly successful at tapping into the tech-literate but financially under-served segments, the report notes.

Financial technology is one of the fastest-growing parts of the UK economy, employing more than 60,000 people and generating in excess of £20 billion in revenues annually. With a major financial services sector and several tech start-up initiatives on the go, Scotland has been touted as a potential leader in the field.

Imran Gulamhuseinwala, EY global fintech leader, said: “Fintechs are clearly gaining widespread traction across global markets and have achieved the early stages of mass adoption in most countries.

“It really is now a critical time for 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.”

The study reveals that money transfers and payments services are continuing to lead the fintech charge with adoption standing at 50 per cent in 2017, based on the consumers that were surveyed.

Some 88 per cent of 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.

The demographic most likely to use fintech are millennials – those aged 25 to 34 – followed by 35- to 44-year-olds.

The term fintech appears to have been coined in 1972 by Abraham Leon Bettinger, vice-president of Manufacturers Hanover, a New York bank, to describe technology “combining bank expertise with modern management science techniques and the computer”.