Global fintech adoption rate almost doubled to 64% in 2019, compared to two years ago, with emerging markets like China and India leading the way with 87% adoption, according to EY Global FinTech Adoption Index 2019.
EY attributes the growth to incumbents entering the fray in a big way. Markets with a sharp rise in adoption like Ireland, the Netherlands and Singapore reflect the availability of fintech services offered by banks, insurers, stock brokers and other incumbent financial institutions, says EY.
Russia and South Africa reported an adoption rate of 82%. Among the developed countries, the Netherlands reported 73%, while in the UK and Ireland it was 71%, reflecting the development of open banking in Europe.
In India and Russia, 99.5% of consumers are aware of fintech services available to transfer money and make payments. The high rate of awareness in India stems in part from the government’s plan, announced in 2017, to decrease the amount of paper currency in circulation, according to EY.
“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,” says Mahesh Makhija, partner and leader, digital and emerging tech, EY.
Adoption of fintech services has been on the rise consistently; it was 16% in 2015, the year EY published the Index for the first time, and 33% in 2017. The index also recorded high awareness among adopters, with 96% of consumers worldwide reporting knowledge of at least one alternative fintech service available to help them. The report also says that three out of four global consumers use a money transfer and payments fintech service, while one out of two consumers use a fintech insurance service.
EY conducted online interviews with more than 27,000 consumers in 27 markets across six continents, up from 20 markets in 2017, for the index; of these 10 were emerging markets, EY said in its report.
This year, EY also included innovative, technology-enabled services provided by incumbent financial institutions, like banks, insurers, brokers and wealth managers, in its definition of fintech, compared to earlier, when the focus was on services originated by challengers.
Globally, small and midsize enterprise (SME) adoption of fintech stood at 25%, while 56% use a banking and payments fintech service. EY interviewed senior decision makers at 1,000 SMEs in five countries— two developed countries (the U.K. and the U.S.) and three emerging countries (China, Mexico and South Africa).
“No longer just disrupters, 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,” Makhija said.