Fintech adoption could double among digitally active consumers in 2016

This change will require traditional financial services companies to revisit their customer service strategies to compete effectively with new market entrants, the same source points out. According to the index, 15.5% digitally active consumers have used at least two fintech services (financial services products developed by non-bank, non-insurance, online companies) in the past six months.

The index evaluates the use of 10 fintech services in four categories: savings and investments; money transfer and payments; borrowing; and insurance. The 10 services include: peer-to-peer platforms for investments; equity or rewards crowdfunding; online investment advice and investments; online financial planning; online stock broking or spread betting; online foreign exchange; overseas remittances; non-bank money transfers; borrowing using peer-to-peer platforms; and health insurance premium aggregators or car insurance using telematics.

Payment services have the highest adoption rate among fintech products in the markets surveyed (17.6%). Services in this category include the use of non-bank providers to make online payments, online foreign exchange and overseas remittances.

Early fintech adopters tend to be younger, higher-income customers. Respondents between the ages of 25 and 34 years old used at least two fintech products in the past six months the most (25.2%), followed by those aged 35 to 44 (21.3%), and those aged 18 to 24 (17.7%).

Fintech use is highest among consumers with incomes greater than USD 150,000 (44.1%). Usage declines to 24% among consumers with incomes between USD 70,001 and USD 150,000, and 14.7% for consumers with incomes between USD 30,001 to USD 70,000.

For digitally active respondents who have not used two or more FinTech products in the past six months, 53.2% say they were unaware the products existed, followed by 32.3% who say that they do not have a need to use the products, and 27.7% who prefer to use a traditional financial services provider, while 21.3% say they do not understand how the products work.

The index draws upon a survey of 10,131 digitally active consumers undertaken from 1 September 2015 to 6 October 2015. Survey respondents were located in Australia, Canada, Hong Kong, Singapore, the UK and the US. Fintech users were defined as survey respondents who indicated they used two or more fintech products in the past six months. EY is a global leader in assurance, tax, transaction and advisory services.