SA's fintech market poised for rapid growth
SA's future adoption rate of fintech services is likely to increase to an average of 71% in the future, much higher than the expected global growth rate of 52%.
This is according to Ashwin Goolab, EY's financial services Africa director, who believes this is largely due to the presence of established fintech firms and higher customer acceptance in the country.
Goolab was speaking following the release of the EY FinTech Adoption Index 2017 study, which lists SA among the countries that will see significant growth in fintech adoption.
According to him, the report places SA in the third spot, after India and China respectively, in global rankings for increased adoption of fintech services.
Goolab explained that based on the respondents' current use of fintech services, it shows South Africans are not only aware of fintech but there will be an increase in adoption from the current levels in the near future.
When asked if they will use more fintech services in the future, 71% of the respondents said they will continue to use fintech, he stated. "Adoption is expected to grow in the next few years by 71%...this adoption will be across all the categories."
The global accounting and consulting firm released the second edition of its fintech study which looked at the global adoption rate of fintech over the past 18 months.
The EY study was first launched in 2015 and surveyed people in only six countries at the time. This year, the firm surveyed individuals across 20 markets worldwide and covered five fintech categories, namely: money transfer and payments, borrowing, savings and investment, financial planning, and insurance.
Online interviews were conducted with 22 000 digitally active people across 20 markets. In terms of EY's definition, digitally active persons are individuals with access to a mobile phone, Internet or both.
In SA, 1 035 digitally active people, that used two or more fintech services in the last six months, were surveyed and showed the country's fintech adoption rate of 35%, which is higher than the global average of 33%.
"The global average is 33% so SA is higher than the global average of those other 19 markets," said Goolab.
The study also showed the majority of South African fintech adopters come from large cities, making up 42% of the country's adopters.
Goolab said respondents revealed the number one reason they used fintech services is the convenience factor. "Consumers like the fact that it's easy to set up an account, access to services 24 hours a day and seven days a week, as well as access to different products and services."
He added: "The findings of the 2017 study show fintech firms have reached a tipping point, and are poised for mainstream adoption across our 20 markets. Building upon the strength of their core characteristics of focusing on the customer proposition and leveraging technology in novel ways, fintech companies are gaining traction in the market. In the process, they are blurring boundaries between financial products and lifestyle propositions, as well as defining new standards within financial services.
"Traditional firms, who sometimes struggle to deliver the same seamless and personalised user experiences, will undoubtedly need to step up their efforts to remain competitive. We are likely to see greater collaboration between traditional firms and fintech firms in the future."