Driven by innovative start-ups and major technology corporations, FinTech companies are capturing larger market shares of the financial services market. EY investigates the reasons that make customers switch.
With FinTechs, the risk of disruption for traditional financial service providers such as banks and asset managers became real. Using a survey with 10,000 digitally active participants from Australia, Canada, Hong Kong, Singapore, the United Kingdom and the United States, Ernst & Young tries to understand the overall rate of FinTech adoption better. The survey shows, that already 15.5 percent of digitally active consumers have used at least two FinTech products within the last six months. EY predicts, that adoption rates could double with the year as awareness of the available products increases.
As pointed out in their report, early FinTech adopters tend to be younger, higher-income customers, with adoption concentrated in high-development urban areas - a customer group that was most valuable for traditional financial service providers. Money transfer and payment services are the FinTech services used most (17.6% of participants used them), closely followed by services for savings and investing (16.7%). With some distance, participants have adopted to insurance (7.7%) and borrowing (5.6%) services from FinTechs.
The top reasons to use FinTech are the ease to set up an account, say 43.4 percent of participants. Other reasons, although much less stated, are more attractive rates/fees (15.4%), access to products and services (12.4%), better online experience and functionality (11.2%) as well as a better quality of service (10.3%).
Reasons not to use FinTech companies were unawareness for their existence (53.2%), no need to use them (32.3%), a preference for traditional service providers (27.7%), a not understanding for how they work (21.3%), distrust (11.2%) and a bad experience with them (0.8%).