EY Study Looks At FinTech In Bermuda & Abroad

June 29, 2017 | 0 Comments

Levels of financial technology [FinTech] adoption among consumers has surged globally over the past 18 months and is poised to be embraced by the mainstream, according to the latest EY FinTech Adoption Index.

A spokesperson said, “An average of 33% of digitally active consumers across the 20 markets in the EY study now use FinTech.

“The study, based on 22,000 online interviews with digitally active consumers across 20 markets, shows that the emerging markets are driving much of this adoption with China, India, South Africa, Brazil and Mexico averaging 46%.

“China and India in particular have seen the highest adoption rates of FinTech at 69% and 52%, respectively. FinTech firms in these countries are particularly successful at tapping into the tech-literate but financially under-served segments, according to the study.

“The UK has also shown significant growth, with adoption rates now standing at 42%.

“The EY FinTech Adoption Index evaluates services offered by FinTech organisations under five broad categories – money transfers and payments services, financial planning, savings and investments, borrowing and insurance. It reveals that money transfers and payments services are continuing to lead the FinTech charge with adoption standing at 50% in 2017, based on the consumers that were surveyed.

“88% 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.

“Insurance has also made huge gains, moving from being one of the least commonly used FinTech services in 2015 to the second most popular in 2017, now standing at 24%. According to the study, this has largely been due to the expansion into technologies such as telematics and wearables [helping companies to better predict claim probability] and in particular the inclusion and growth of premium comparison sites.”

Chris Maiato, EY Advisory Leader in Bermuda, Bahama and Cayman [BBC], says, “We are seeing widespread FinTech interest in the BBC region, across all industries. FinTechs not only provide an opportunity to our market; but our market provides an opportunity to FinTechs by giving a window into some of the largest companies in the insurance, banking and asset management industries.

“In the BBC, FinTechs have direct accessibility to leadership teams and global markets.”

“FinTech users are also actively using the sharing economy and on-demand services. According to the study, 40% of FinTech users regularly use on-demand services [e.g. food delivery], while 44% of FinTech users regularly participate in the sharing economy [e.g. car sharing]. In contrast, only 11% of non-FinTech adopters use either of these services on a regular basis.

“The demographic most likely to use FinTech are millennials – 25–34-year olds, followed by 35–44-year olds. The study revealed that people in this age range are comfortable with the technology and that they also require a wide range of financial services as they achieve milestones such as completing their education, gaining full-time employment, becoming homeowners and having children.

“There is however also growing adoption among the older generations: 22% of digitally active 45–64-year olds and 15% of those over 65 said they regularly use FinTech services.

“The study has also identified a new segment of users, the ‘super-user’. These individuals use five or more FinTech services and account for 13% of all consumers. ‘Super-users’ generally consider FinTech firms to be their primary providers of financial services.

“The EY FinTech Adoption Index says that FinTech adoption is set to increase in all 20 markets covered by the study. Based on consumers’ intention of future use, FinTech adoption could increase to an average of 52% globally. The highest proportional increases of intended use among consumers is expected in South Africa, Mexico and Singapore.”

Imran Gulamhuseinwala, EY Global FinTech Leader, said, “There are those who believe that FinTechs struggle to translate the innovation and great customer experience that they create into real customer adoption. The EY FinTech Adoption Index suggests that thinking is now outdated.

“FinTechs are not only becoming significant players in the financial services industry, but are also shaping its future. Their new propositions are increasingly attractive to consumers and this trend is only set to continue as awareness grows, concerns are allayed and new advancements are made.

“Traditional firms, who sometimes struggle to deliver the same seamless and personalised user experiences, will undoubtedly need to step up their efforts to remain competitive. I think it’s likely that we will see greater collaboration between traditional firms and FinTechs in the future.”

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