Australians are increasingly tapping into FinTech services
Australia is among six large markets across the globe that have experienced a remarkable jump in the level of financial technology (FinTech) adoption since 2017. Nearly 60% of consumers in Australia now use FinTech services of varying kinds, which is nearly double the figure (37%) of two years ago.
This is according to the latest Global FinTech Adoption Index compiled by Big Four accounting and advisory firm EY, which is based on a survey with 27,000 consumers in 27 markets across the globe. Other major markets that contributed to this jump include Canada, Hong Kong, Singapore, the UK and the United States.
FinTech adoption in these countries stood cumulatively at 16% when EY first compiled the index in 2015, a figure that nearly doubled by 2017 to reach 31%, and has now touched 60%. The global average, meanwhile, has undergone a similar spike over the last four years, having arrived at 64% this year.
For Australia, the adoption rate stands well below the global average at 58%, although the rate of increase represents an improving scenario. Since the start of this year, however, investment in the FinTech space has been considerably low, having dropped by 50% from the same period last year. Nevertheless, the scale and variety of FinTech services in Australia and across the globe appear to be increasing rapidly, making multi-dimensional improvements to the financial world.
Australian firms have been a part of this global drive. Last year, two Australian FinTech firms – AfterPay Touch and Airwallex – were both named by investment firm H2 Ventures among the top 50 FinTech companies across the globe, while five others from Australia were named among the top 100.
The services being offered by these firms vary to a large extent, and impact distinct financial domains such as banking, insurance and financial services. To bring some order to the dynamic FinTech environment, EY has identified 19 individual FinTech services, and clubbed them into five categories.
These categories – termed as ‘buckets’ by EY – include money transfer & payments, budgeting & financial planning, savings & investment, as well as borrowing & insurance. FinTech adopters, according to EY, are only those who use FinTech services in two or more of these buckets.
Based on this criteria, the rate of adoption in Australia is at 58%, which is considerably below global figures. EY reports that consumers across the globe are well aware of FinTech’s potential across all buckets, with awareness levels in some countries reaching as high as 99.5% for the money transfers & payments bracket.
However, Australia’s 58% represents a substantial growth story over the last four years. In 2015, FinTech adoption in Australia stood at just 13%. A more open consumer mindset since then has combined with growth in development and targeted marketing of FinTech services to more than quadruple the rates. According to the researchers, Australia – alongside the other six markets mentioned above – are examples of strong FinTech growth stories.
“Over the course of five years, these six markets have become excellent case studies in the maturation and globalisation of the industry. In the past 18 months, EY research has shown that more than half of the top FinTech fundraises in these six markets intend to use some or all of funds raised for international expansion,” states the report.
The international outlook in Australia’s FinTech environment is likely to generate strong impact on its growth, particularly given the strong markets in the neighbouring Asia and Asia-Pacific markets. China and India, for instance, stand at the top of the global index, with identical FinTech adoption rates of 87%. This growth is expected to rub off on Australia through the Asia-Pacific network.
