Digitally active Australian consumers are embracing FinTech at a rapid pace, with Australia now ranked fifth highest in FinTech adoption among 20 markets surveyed globally, according to the latest EY FinTech Adoption Index.
China has the highest level of FinTech adoption globally at 69%, followed by India (52%), the UK (42%) and Brazil (40%), with Australia (37%) rounding out the top five.
The study, based on 22,000 online interviews with digitally active consumers across 20 markets, including Australia, shows that FinTech services are poised for mainstream adoption on a global scale with an average of one in every three (33%) digitally active consumers now using FinTech.
EY FinTech spokesperson, Rowan Macdonald says Australia’s top five ranking represents a significant increase in local levels of FinTech adoption over just the last 18 months.
“In our previous report, we predicted FinTech adoption rates were set to double and that has certainly been the case, with current usage among digitally active Australians rising from 13% in 2015 to 37% in our latest survey,” Macdonald says.
“Ease of setting up an account and having access to services 24 hours a day, seven days a week are the top drivers for FinTech adoption in Australia. We expect rates of adoption to continue to grow as awareness of innovative products and services build.
“What the Adoption Index clearly shows is that FinTech is gaining widespread traction, both locally and globally, and has achieved the early stages of mass adoption in most countries. FinTech start-ups have been very successful in building on what they do best – using technology in novel ways and having a laser-like focus on the customer.
“For traditional financial services companies, there has also been strong recognition that FinTech adoption is a reality. Traditional players continue to reassess their business models and look at ways of integrating developments in FinTech into their own business models to reflect the changing needs and expectations of digitally active consumers.”
Payment services driving adoption
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.
Globally, money transfers and payments services are continuing to lead the FinTech charge with adoption standing at 50% in 2017 and 88% of respondents globally saying they anticipate using FinTech for this purpose in the future.
New services such as online digital-only banks and mobile phone payment at checkout are contributing to this trend.
Australia has the fourth highest current adoption rate for money transfers and payments services, at 59%.
Insurance has also made huge gains, moving from being one of the least commonly used FinTech services globally in 2015 to the second most popular in 2017, now standing at 24%.
Current adoption levels for insurance FinTech services in Australia are slightly higher than the global average at 29%.
According to the study, the upswing has largely been due to the expansion of technologies such as telematics and wearables (helping companies to better predict claim probability) and the inclusion and growth of premium comparison sites.
China charge has regional impact
EY Asia-Pacific FinTech Leader, James Lloyd says China is undoubtedly leading the FinTech charge with adoption at 69% among its digitally active population, more than double the global average.
“This is having a flow-on effect for other parts of Asia-Pacific, with leading Chinese FinTech players impacting the surrounding markets both directly – through international market entry, outbound investment and partnering – and indirectly, as FinTechs in other countries seek to replicate aspects of their success in local markets. As a result, we can expect to see adoption levels continue to increase rapidly right across the region,” Lloyd says.
“The factors driving this increase in anticipated future use across Asia-Pacific are mixed. In some instances, it’s a case of ‘technology leapfrog’, with new market entrants tapping into tech-savvy, financially under-served populations. This is particularly evident in markets like China, Indonesia and India. In Australia on the other hand, we are seeing greater engagement from the larger, traditional financial services players, as they invest in their innovation agendas and partner with FinTechs to keep pace with evolving consumer expectations.”
FinTech adoption set to increase even further, both locally and globally
Within Australia, FinTech adoption looks poised to continue growing with 43% of digitally active customers stating that they intend to use it in the future.
Interestingly, while adoption will continue to increase among young Australian adults, usage is also expected to increase among older generations who are warming to idea of conducting financial transactions digitally.
This anticipated rise in FinTech use is not just limited to Australia.
In fact, the EY FinTech Adoption Index shows that FinTech adoption is set to increase in all 20 markets covered by the study.
Based on consumers’ stated intention of future use, FinTech adoption could increase to an average of 52% globally.
Imran Gulamhuseinwala, EY Global FinTech Leader, says FinTechs are not only becoming significant players in the financial services industry, but are also shaping its future.
“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,” Gulamhuseinwala says.
“FinTechs 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.”