Financial technology, or FinTech for short, is a new and exciting part of the financial services industry. Innovative companies in this sector are using new technologies to compete in the financial services market. They’re offering everything from loans to money transfers to insurance, and they’re giving traditional financial services companies a run for their money.
Over the past 18 months, global adoption of financial technology services has surged dramatically. In the United States alone, adoption of FinTech has doubled since 2015. Here’s what you need to know about the rise of FinTech adoption.
Who’s Using Financial Technology Services
Globally, millennials are most likely to be using financial technology services. The global average adoption rate among this age group is 48 percent. The adoption rate is even higher in the U.S. Fifty-nine percent of millennials in the U.S. use financial technology services.
It’s no surprise that younger people are the most likely to use FinTech services. They’re comfortable with technology, so turning to FinTech companies makes sense. They’re also at the stage in their lives when they need a wide range of financial services. Young adults are getting their first full-time jobs, buying their first houses, and having children. All of these milestones require the services of financial companies, and these days, consumers don’t need to turn to banks.
Of course, millennials aren’t the only age group turning to financial technology. Globally, 41 percent of people between 35 and 44 years old are using these services. In the United States, 50 percent of this age group are financial technology adoptees.
Older generations are using financial technology as well, but not quite as often. Among digitally active people between 45 and 64, there’s a 40-percent adoption rate of these services. Seventeen percent of the digitally active senior population is using financial technology.
While these figures are impressive, there’s still a lot of room for growth. Most adults have a need for financial services like loans, money transfers, or payments. The people who are currently getting these services from traditional banks or credit unions may turn to financial technology services in the future.
Financial Technology Services with Greatest Adoption
You may be wondering what types of financial technology services are popular. Worldwide, money transfers and payment services have the greatest adoption. These services have been vastly improved by financial technology firms, so it’s no surprise they’re so popular.
Traditionally, money transfers are expensive. Banks and traditional money transfer companies charge high fees. They charge a minimum fee, so sending small amounts of money can be prohibitively expensive. They charge handling fees for transferring the money. Some banks or companies also charge a premium if consumers want the transfer to go through faster.
Financial technology firms have revolutionized money transfers. Consumers can send money to friends or family around the world with convenient mobile apps. They don’t need to go stand in line at the bank anymore. Financial technology firms also charge lower prices than traditional money transfer companies.
This is the same reason why payment services are a widely adopted financial technology service. When consumers make payments through banks or with their credit cards, they have to pay high fees. Financial technology firms make it possible for consumers to make payments with lower fees.
Other Popular Services
While money transfers and payment services are the most widely adopted financial technology services, other services are popular, too. Digital banks are an example of another popular service. With these services, consumers who don’t want to store their money in a traditional bank have alternatives. Digital banks can also reach underbanked populations. In areas where there aren’t many—or any—banks, consumers can still access digital banking apps.
In the United States, insurance is making huge gains in the FinTech market. In 2015, insurance represented the least commonly used financial technology service. That changed very quickly. In 2017, it’s the second most popular FinTech service in the United States, with a 24-percent adoption rate globally.
There’s a lot of demand for alternatives in this sector. InsurTech companies are using technology and design to make the health insurance experience more pleasant for consumers. They’re also offering more flexible services than traditional insurance companies. For example, Metromile sells pay-per-mile car insurance. This flexibility is appealing for people who don’t drive much.
Reasons for Increased Financial Technology Adoption
FinTech adoption is increasing rapidly for a fairly simple reason: financial technology companies are meeting customers’ needs.
FinTech companies realized what problems consumers were having with traditional financial services companies. The issues with high fees, poor service, slow transfers, and lack of access created a golden opportunity for startups. By solving consumers’ long-standing problems with traditional financial services companies, FinTech companies were able to grow rapidly.
Instead of paying high fees to money transfer companies, consumers can now send inexpensive transfers with FinTech apps. Instead of waiting days for payments to go through, they can send them instantly. Consumers who couldn’t get services from traditional banks are now able to access alternatives.
Financial Technology Adoption in Emerging Markets
A lot of the growth of FinTech adoption is coming from emerging markets. In China, 69 percent of the population uses financial technology services. India also has a high adoption rate, with 52 percent of its population using financial technology services.
In these countries, there are many people who are tech-literate but underserved by financial services. In China, both consumers and businesses have struggled to get services from traditional banks. In the past, they had to make do without banking services. Now, FinTech companies are eager to meet their needs. The same pattern is occurring in other emerging markets like South Africa, Brazil, and Mexico.
The Future of Financial Technology
FinTech services have become more popular in the last 18 months, and this trend will probably continue in the future. Consumers like using financial technology services, and they intend to keep using them in the future. In the U.S., FinTech adoption could reach 46 percent overall in the not-too-distant future. Worldwide, adoption of financial technology services could reach 52 percent.
For people working in the financial technology industry, this is an exciting time. There are many opportunities to gain customers for new services. Innovative companies can get in on the impressive growth of the industry.
Tips for Hiring in Financial Technology
To stay competitive in this fast-growing industry, you need to have the right people on your team. IT professionals are in high demand, so it can be hard to find the right employees. The best candidates may already be employed, and qualified unemployed candidates get hired quickly.
Often, it makes sense to outsource recruitment in high-demand industries. When you turn to an experienced technical recruiter, you can get access to better candidates. That’s because recruiters know where to look to find the right candidates, and they can convince them to join your company. They also have the expertise to find good candidates quickly, before your competitors can find them.
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