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EY: Fintech moving into the mainstream

Jun 30
 
Tags: Ernst & Young LLP
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EY: Fintech moving into the mainstream

Financial technology (fintech) firms are on the brink of mainstream adoption on a global scale, according to EY.

Often defined as tech firms that use new technologies and innovations to challenge traditional ways of doing things in the financial services sector, fintechs have been steadily growing in size and influence in recent years.

The latest EY Fintech Adoption Index showed that an average of one in three digitally active consumers (33 per cent) across 20 markets now use services from these providers.

That proportion is higher in emerging markets, with China, India, South Africa, Brazil and Mexico reporting average adoption rates of 46 per cent. In China alone, 69 per cent of respondents said they regularly use fintech services.

Among developed markets, the UK leads the way with an adoption rate of 42 per cent.

Looking at specific sectors within the financial services industry, EY found that money transfers and payment services are "continuing to lead the fintech charge", with half (50 per cent) of the consumers surveyed using fintech providers for these purposes.

A substantial majority (88 per cent) of respondents said they anticipate using fintechs to complete money transfers and payments in the future. One of the big factors in this trend is the growth of digital-only banks and mobile payment at retail checkouts.

Fintechs are also having a big impact on the insurance sector, which went from being one of the least commonly used services in 2015 to the second most popular in 2017.

Imran Gulamhuseinwala, EY global fintech leader, said these emerging firms are achieving success by "building on what they do best - using technology in novel ways and having a laser-like focus on the customer".

He added: "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."

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