Fintech adoption eroding bank brand loyalty
Brand loyalty will not be enough to hold customers in place as the adoption of financial services technology continues to develop momentum in Australia and elsewhere, according to new research released by Ernst & Young (EY).
The research, the EY Fintech Adoption Index, sampled the views of more than 10,000 digitally active consumers in Australia, Canada, Hong Kong, Singapore, the United Kingdom and the US and suggests that new technology will continue being a game-changer in terms of market share and structure.
EY Australia's FinTech Leader, Anita Kimber, said the changes being wrought by financial services technology would require traditional financial services companies to revisit their product, service and retention strategies if they wanted to compete effectively with new market entrants.
"The increasing availability of innovative, competitively priced products provided by the new Fintechs shows that consumers are willing to shop around and experiment," she said.
"Brand loyalty is no longer enough. As FinTech continues to catch on, traditional financial services companies will have to reassess their view of what consumers are looking for in a digital age and step up their efforts to serve them effectively," Kimber said.
The research found that Hong Kong has the highest rate of FinTech use of all markets surveyed (29.1 per cent, with the US having the second-highest adoption rate (16.5 per cent), followed by Singapore (14.7 per cent), the UK (14.3 per cent), Australia (13 per cent), and Canada (8.2 per cent).
Interestingly, the survey found that urban consumers used FinTech products at rates greater than the 15.5 per cent average in all of the six regions surveyed with Sydney showing a higher level of adoption at 16 per cent than the Australian average.
Commenting on this element, Kimber noted that while FinTechs had entered the local market relatively late, a 13 per cent early adopter usage amongst digitally savvy Australian consumers was a trend that could not be ignored by the local banks and insurers.
"Market concentration, limited funding, and a comparatively conservative and costly regulatory environment may have all contributed to the later entry of FinTech providers into the Australian market but with business models having proven successful overseas, we are now seeing more players enter the market and adoption rates are likely to rise accordingly," she said.