Financial technology (fintech) adoption in Singapore
lags far behind other economies around the world, a report by
business consultancy EY showed on Tuesday (July 18), although it
added that the Republic is expected to catch up and exceed the
global average in the next several years, largely because of
Government-led efforts.
In Singapore, fintech adoption among digitally active
consumers rose to 23 per cent this year from 15 per cent in 2015,
the report showed, but remained well below the average of 33 per
cent among the 20 markets surveyed.
Mr Liew Nam Soon, EY Asean Financial Services Managing
Partner at Ernst & Young Advisory, said: “While fintech
adoption levels in Singapore are lower than the global average, the
groundwork has been laid and its anticipated penetration will
increase across all categories in the next twelve months, with the
highest growth expected from borrowing platforms and financial
planning tools.”
“The lower adoption levels doesn’t mean that Singapore
consumers are not open to fintech innovation. On the contrary, it
reflects the efforts of traditional banks working with fintech
start-ups, which gives consumers fewer reasons to go directly to
the fintechs, unless it is a brand new innovation or value
proposition,” he added.
Based on 22,000 online interviews with digitally active
consumers across 20 markets, the report showed that emerging
markets are driving much of the fintech adoption, with China,
India, South Africa, Brazil and Mexico averaging 46 per cent. The
other markets covered include Australia, Canada, Hong Kong,
Singapore, the United Kingdom, the United States, France, Spain,
Switzerland, Germany, Ireland, Japan, Netherlands, South Korea and
Belgium/Luxembourg (considered as one market).
Not surprisingly, China has seen the highest adoption
rates of fintech at 69 per cent, followed by India at 52 per cent.
Fintech firms in these countries are particularly successful at
tapping into the tech-literate but financially under-served
segments, EY said.
Fintech adoption is set to increase in all 20 markets
covered in the report. Based on consumers’ intention of future use,
adoption could rise to an average of 52 per cent globally in the
next several years, with Singapore among those showing the highest
proportional increases of intended use.
FinTech adoption in Singapore is expected to increase
to 56 per cent, largely driven by the Government’s effort to
position the Republic as a top fintech hub and create a friendly
regulatory environment, the report said.
Mr Liew said more consumers in Singapore will use
fintech, not just the millennials but also the older generation, as
awareness increases and users gain greater comfort in conducting
financial transactions digitally.
“This is not surprising, given the vibrant fintech
ecosystem – support from consumers, access to talent and capital,
and governance. For financial institutions and fintech
collaborations to be successful, fintech companies must be able to
get access to customers and scale to build a sustainable business
model,” he added.
The EY FinTech Adoption Index evaluates services
offered by fintech organizations under five broad categories –
money transfers and payments services, financial planning, savings
and investments, borrowing and insurance.
It showed that money transfers and payments services
continued to lead the fintech charge with global adoption standing
at 50 per cent this year, based on the consumers that were
surveyed. Some 88 per cent of global respondents said they
anticipate using fintech for this purpose in the future. The new
services that have contributed to this upsurge include online
digital-only banks and mobile phone payment at checkout, the report
said.
Insurance also made huge gains, moving from being one
of the least commonly used fintech services in 2015 to the second
most popular this year, now standing at 24 per cent. According to
the report, this has largely been due to the expansion into
technologies such as telematics and wearables (helping companies to
better predict claim probability) and in particular, the inclusion
and growth of premium comparison sites.
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