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High-income young people are the biggest group of early adopters of the products and services on offer from fintech companies, according to a study by EY.
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These companies are offering the same financial products as traditional financial services companies but in a digital format that is quick and easy for customers to access. According to the study, it is this ease of use of fintech products that is the main reason for selecting these financial services suppliers.
The findings of the EY study of over 10,000 digitally active consumers in Australia, Canada, Hong Kong, Singapore, the UK and the US found that about 3,000 had used fintech. Among the fintech users, a total of 25.2% of 25 to 34-year-olds used two or more fintech services; the figure is expected to reach 47.8% in the foreseeable future, said EY.
Another 21.3% of users of two or more fintech services came from the 34 to 44 age group, while 17.% were 18 to 24 years old, 11.7% 45 to 54 years old, 7.3% 55 to 63, and 5.5% over 65.
The EY report said: “Adoption is relatively high for such a new category – with 15.5% of digitally active consumers using fintech products. The projected growth is dramatic: the adoption levels could potentially double in 12 months.”
People earning over $150,000 (£106,000) a year were the biggest user group in income terms, with 44% using two or more fintech products and services. Only 6% of users were in an income group below £30,000.
Money payments and transfers are the most common use of fintech, with 17.6% of respondents that used at least one fintech service accessing these. Savings and investments were next, with 16.7% using this type of service. Insurance (7.2%) and borrowing (5.6%) came next.
There is hope for the large traditional banks if they can get their IT development right as ease of use was given as the reason for using fintech by 43.4% of respondents. Only 1.8% said they used fintech because they distrusted banks.
Of more than 7,000 people who had never used fintech only 11.2% said it was because they don’t trust them, while over half (53.2%) put it down to having never heard of them.
Better and easier
The EY report said: “Some of the new fintech services are simply better, offering deeper or unique value propositions, and a more intuitive experience than traditional financial products.”
It cited ease of setting up an account as one example. “With many fintech products, account setup can be completed in a few minutes.”
The report concluded: “Traditional bank and insurance customers have learned that they can get some of what they need online, in the same way that traditional retail customers, 10 or 15 years ago, embraced the online channels.”