SINGAPORE (July 18): Singapore’s financial technology (fintech) adoption grew to 23% this year from 15% in 2015, according to study findings by assurance, tax, transaction and advisory services firm EY.  

The latest EY Fintech Adoption Index is based on 22,000 online interviews with digitally active consumers across 20 markets, and evaluates services offered by fintech organisations under five broad categories: money transfers & payment services, financial planning, savings & investments, borrowing, and insurance.

This year’s edition of the index reflects a surge in global levels of fintech adoption over the past 18 months, with an average of 33% digital active consumers surveyed indicating that they now use fintech.

While Singapore’s latest rate of fintech adoption levels are significantly lower than the global average, Liew Nam Soon, EY Asean financial services managing partner, Ernst & Young Advisory, says this does not mean the city state’s 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 fintech, unless it’s a brand new innovation or value proposition,” says Liew.

According to Liew, the ground work for Singapore’s adoption of fintech has been laid – and its anticipated penetration is expected to increase across all categories in the next twelve months, particularly from borrowing platforms and financial planning tools.

25- to 35-year-old adults in Singapore dominate as the age group most likely to use fintech, much like the global average, and it is this demographic that also prove high adopters of fintech services among the nation’s population.

Meanwhile, EY notes that emerging markets (EMs) are driving much of the spike in global fintech adoption with China, India, South Africa, Brazil and Mexico averaging 46%.

China and India in particular have seen the highest adoption rates of fintech this year at 69% and 52%, respectively.

Fintech firms in these countries are particularly successful at tapping into the tech-literate but financially under-served segments, says EY.

The firm projects fintech adoption to increase in across all of its 20 markets studied in the EY Fintech Adoption Index to an average of 52% globally, with the highest proportional increases of intended use among consumers to be expected in South Africa, Mexico and Singapore.

“In Singapore, we anticipate adoption to increase to 56% with more usage by not just the millennials but the older generation, as awareness increases and the users gain greater comfort towards conducting financial transactions digitally. This is not surprising, given the vibrant FinTech ecosystem – support from consumers, access to talent and capital, and governance,” says Liew.

“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. To do so often requires partnerships with financial institutions or businesses with an existing large customer base and adequate support in investment funding.”