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Australia is among six major markets worldwide that have seen a remarkable jump in financial technology (FinTech) adoption since 2017. Almost 60% of consumers in Australia now use FinTech services of some kind, almost double the number (37%) two years ago.
This is according to the latest Global FinTech Adoption Index compiled by Big Four accounting and consulting firm EY, based on a survey of 27,000 consumers in 27 markets worldwide. Other major markets that contributed to this jump include Canada, Hong Kong, Singapore, the United Kingdom and the United States.
FinTech adoption in these countries reached a cumulative 16% in EY. first compiled the index in 2015, a number that nearly doubled to 31% by 2017 and now touches 60%. The global average, meanwhile, has seen a similar jump over the past four years, reaching 64% this year.
In Australia, the adoption rate is well below the global average of 58%, although the rate of increase represents an improving scenario. However, since the beginning of this year, investments in the FinTech space have been quite low, falling by 50% from the same period last year. However, the range and variety of FinTech services in Australia and around the world seem to be growing rapidly, bringing multi-dimensional improvements to the financial world.
Australian firms were part of this global effort. Last year, two Australian FinTech firms – AfterPay Touch and Airwallex – were both named by investment firm H2 Ventures among Top 50 FinTech Companies worldwide, while five others from Australia were named in the top 100.
The services offered by these firms vary widely and affect different financial areas such as banking, insurance and financial services. To bring some order to the dynamic FinTech environment, EY identified 19 individual FinTech services and divided them into five categories.
These categories – called “buckets” by EY – include money transfers and payments, budgeting and financial planning, savings and investments, as well as loans and insurance. According to EY, FinTech adopters are only those who use FinTech services in two or more of these groups.
Based on this criterion, Australia’s acceptance rate is at 58%, well below global figures. EY reports that consumers worldwide are well aware of the potential of FinTech across all segments, with awareness levels in some countries reaching as high as 99.5% in money transfers and payments.
However, Australia’s 58% represents significant growth over the past four years. In 2015, FinTech adoption in Australia was just 13%. A more open consumer mindset has since combined with growth in development and targeted marketing of FinTech services, which has increased rates more than fourfold. According to the researchers, Australia – along with 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 of the industry’s maturation and globalization. Over the past 18 months, EY research has shown that more than half of the top FinTech fundraisers in these six markets intend to use some or all of the funds raised for international expansion,” the report said.
The international outlook in Australia’s FinTech landscape is likely to have a strong impact on its growth, especially given the strong markets in neighboring Asia and Asia Pacific. For example, China and India top the global index with the same FinTech adoption rate of 87%. This growth is expected to reach Australia through the Asia-Pacific network.
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