Global FinTech Adoption Index 2019As FinTech becomes the norm, you need to stand out from the crowdFor this years survey, we interviewed more than 27,000 consumers in 27 markets. We examined not only how FinTech has improved and expanded its offerings around the world, but also how it has spurred change across the entire financial services industry. FinTech strives to make financial services more accessible for both consumers and businesses. By connecting customers to a digital world, FinTech enhances their experiences, making them efficient, economical and frictionless.There are a few key themes in this years report: No longer just disrupters, FinTech challengers have grown into sophisticated competitors, with an increasingly global reach. Many financial incumbents, such as banks and insurers, offer credible FinTech propositions of their own, challenging the question of what is a “FinTech?” The interactions between challengers, incumbents and players from outside the financial industry are forming FinTech ecosystems that are replacing traditional bilateral partnerships.These themes extend beyond the consumer space. Small and medium-sized enterprises (SMEs) are increasingly using FinTech services. These businesses constitute a distinct customer segment, with needs that are different both from those of consumers and those of large corporations. Thus, this report also contains the first SME FinTech Adoption Indexa survey of 1,000 organizations in five markets.To help bring to life the findings of our surveys, we conducted interviews with a wide range of FinTechs, including stand-alone challengers, financial incumbents and non-financial services companies. Our 2017 case studies focused on how FinTech acquired customers and gained market share. This year, our case studies highlight scaling and expansionand how these organizations are working within a new context for financial services.We expect some of the newer themes weve identified to accelerateincluding the entry of non-financial companies into the FinTech arena and the spread of ecosystems. The pace of innovation continues to accelerate, becoming the “new normal” within financial services. We hope this report contributes to a deeper understanding of FinTechs evolving role, and we look forward to observing how this dynamic industry develops in the future. ForewordFinTech has evolved in significant ways since we published our first global EY FinTech Adoption Index in 2015. That year we observed that FinTech, while nascent, was “clearly more than just hype.” Our next report, in 2017, found that the industry had grown rapidly and had “achieved initial mass adoption.”Gary Hwa EY Global Financial Services Markets Executive Chair and EY Asia-Pacific Financial Services Regional Managing PartnerGlobal FinTech Adoption Index 2019 3 AcknowledgementsSpecial thanks to our panel of FinTech contributors: Coinbase, Funding Circle, Discovery Group, JD Digits, Juvo, Goldman Sachs, Grab Financial Group, InstaReM, Moneytree KK and Yolt.05 Key findings06 Chapter 1: Consumer FinTech adoption trends08 Seen everywhere: growing and globalizing11 Redefining the rules of the game: changing consumer priorities15 Rise of non-financial services companies and the growth of ecosystems18 Methodology20 Chapter 2: SME FinTech adoption trends22 SMEs worldwide have become significant users of FinTech26 FinTech challengers are joining SME-provider ecosystems30 Methodology32 Chapter 3: From the innovators mouth33 Introducing the FinTechs36 Questions and answers42 ContactsContents4 Global FinTech Adoption Index 2019 Key findings We define FinTech as organizations that combine innovative business models and technology to enable, enhance and disrupt financial services.Attractive rates and feesTop reason for consumers to use a FinTech challengerRange of functionality and featuresTop reason for SME adopters to use a FinTech challengerConsumer survey64%Global consumer adoption3 out of 4 global consumers use a money transfer and payments FinTech service75%1 out of 2 global consumers use an insurance FinTech service48%96%Global consumers are aware of at least one money transfer and payment FinTech serviceConsumer adopters turn to someone other than their main bank first 33%Consumers would consider a non-financial services company for financial services68%Consumer adopters are willing to share their bank data with other organizations46%SME survey25%Global SME adoptionSMEs use a financing FinTech service46%SMEs use a banking and payments FinTech service56%SME adopters prefer to find a technological solution where possible93%SME adopters are willing to share data with FinTech companies89%Global FinTech Adoption Index 2019 5 Consumer FinTech adoption trendsThe FinTech industry has grown up and grown out. No longer made up of only start-ups, FinTech today is a host of seasoned companies that offer a broad array of financial services and operate on a global stage.Consumers like what they see. Adoption of FinTech services has moved steadily upward, from 16% in 2015, the year our first FinTech Adoption Index was published, to 33% in 2017, to 64% in 2019. Awareness of FinTech, even among non-adopters, is now very high. Worldwide, for example, 96% of consumers know of at least one alternative FinTech service available to help them transfer money and make payments.Adapting to the rapid evolution of this dynamic and innovative industry, we conducted online interviews with more than 27,000 consumers in 27 markets across six continents, up from 20 markets in 2017. Ten of the 27 markets this year are emerging markets, a recognition of the leading role many of these emerging markets play in FinTech adoption.We asked consumers about their use of 19 FinTech services across five categories. We continue to define a FinTech adopter as someone who has used two or more “buckets” of services, since this indicates a habitual change in behavior in a way that use of a single service does not. A bucket consists of a major FinTech service, or two or more related services, such as online stockbroking and online investment advice. We discuss our methodology in greater detail at the end of this chapter.This year for the first time we formally included innovative, technology-enabled services provided by incumbent financial institutions, such as banks, insurers, brokers and wealth managers, in our definition of FinTech. In prior years, we focused on services originated by challengers (some of whom may have partnered with, or received a substantial investment from, an incumbent). The inclusion of incumbents is an acknowledgement that many established players have developed comparable digital offerings that compete with those offered by FinTech challengers.We see two main types of FinTech propositions: “disrupted” and “invented”. A disrupted service is one that has historically been offered by incumbents, such as automotive insurance or foreign exchange trading. FinTech providers use technology to disrupt these services by offering consumers a more compelling offering such as enhanced capabilities, convenience, or lower prices and fees. This profoundly changes customer expectations in the process, pressuring incumbents to develop their similar services to stay competitive and retain market share.An invented service is one that didnt exist before but is now possible by technology and alternative business models, such as peer-to-peer lending and mobile-phone payments. Some invented services fill niches in the market, and others have the potential to redefine and transform entire financial subsectors. Chapter 16 Global FinTech Adoption Index 2019 FIGURE 1 | Consumer FinTech adoption across 27 markets Notes: The figures show FinTech adopters as a percentage of the digitally active population in each market. All averages are shown on an unweighted basis. *Hong Kong SAR of China*Belgium prior EY research has found that 68% of young investors use social media for all purchases, whether in seeking information or validating their choices after the fact (see EY, “The new norm: FinTech and the digitally enabled wealth customer”).FIGURE 5 | Analysis of views on personal risk management and digital financial services, FinTech adopters versus non-adoptersNotes: The figures show the percentage of respondents who either agree or strongly agree with statements relating to their attitudes to financial and digital services, by FinTech adopters and non-adopters.I generally read the terms and conditions when I sign up for a new financial productI worry about the security of my personal data when dealing with companies onlineI would be comfortable to use a digital, branchless financial services providerI would prefer to view all my financial products in one place through an online or app-based tool65%71%60%47%52%65%38%18%Adopters Non-adoptersFinding 4: FinTech adopters prefer online and app-based financial products despite concerns about personal data security.Digital innovation is disrupting and reshaping financial services at a rapid pace, and incumbents and challengers alike need to be attuned to the evolving expectations of their customers. Challengers have built themselves using a design-first approach and agile work processes. By keeping a technology-forward mindset, they are able to offer FinTech services that are at once personalized, accessible, transparent, frictionless and cost-effective. As our findings showed in 2017, these characteristics are sufficiently appealing to consumers in significant numbers to create a truly disruptive threat to incumbent banks, insurers and wealth managers.The incumbents that are most responsive to this competitive threat are those that disrupt their own propositions and offer comparable FinTech services, either through partnerships, acquisitions or in-house development. In recent years, incumbents have brought forth their FinTech versions of disrupted services in areas such as online foreign exchange, online investment advice and management, and digital-only branchless banking.In effect, FinTech has redefined the rules of the game in financial services. What was considered new and disruptive in 2015 has since become a prerequisite for all players. With so many participants now offering similar services, each company must strive to differentiate itself to attract and retain customers, whether by brand, price or execution.For a company to stand out, it helps to have a keen appreciation of what FinTech adopters wantand what concerns they have. While adopters are much more willing than non-adopters to favor an online tool or an app that allows them to view all their financial products in one place, they are more worried than non-adopters about the security of their personal data. Security concerns are less pronounced in Sweden, Germany, Belgium and the Netherlands, perhaps due to strong data protection regulations in those markets. Overall, despite their security concerns, adopters are comfortable with online aggregator sites and all-digital, branchless financial services. Global FinTech Adoption Index 2019 11