Insurtech take-up sees Australia climb fintech rankings

Consumer uptake of innovative fintech products is set to go mainstream as adoption levels surge among digitally-savvy consumers, according to a study by EY, the global financial services adviser.

The research across 20 markets found that emerging markets are driving much of this adoption with China, India, South Africa, Brazil and Mexico averaging a 46 per cent participation rate.

The UK has also shown significant growth, as the arrival of a new generation of challenger banks rise up to take on the incumbents, with adoption rates now standing at 42 per cent, the report found.

And locally, Australia's adoption of fintech has also increased so much that it now takes fifth slot for the highest adoption rate. Importantly, current adoption levels for insurtech services locally are slightly higher than the global average at 29 per cent, the report found.

More than 37 per cent of digitally-active Australian consumers now use two or more fintech services, more than double the 13 per cent reported in the previous EY survey.

Widespread traction

Imran Gulamhuseinwala, EY global fintech leader, said: “Fintechs are clearly gaining widespread traction across global markets and have achieved the early stages of mass adoption in most countries. On average, one in three consumers already consume fintech services on a regular basis.”

According to Rowan Macdonald, a Sydney-based EY financial services partner, Australia’s top five ranking represents a significant increase in local levels of fintech adoption over just the last 18 months.

“In our previous report, we predicted fintech adoption rates were set to double and that has certainly been the case," he said.

“Ease of setting up an account and having access to services 24 hours a day, seven days a week are the top drivers for fintech adoption in Australia. We expect rates of adoption to continue to grow as awareness of innovative products and services build.”

Across all markets, cheaper money transfers and more streamlined mobile payments services are leading the fintech charge with adoption standing at 50 per cent in 2017.

Insurance has also made huge gains, moving from being one of the least commonly used fintech services globally in 2015 to the second most popular in 2017, now standing at 24 per cent.

Telematics and wearables

According to the study, the upswing has largely been due to the expansion of technologies such as telematics and wearables (helping companies to better predict claim probability) and the inclusion and growth of premium comparison sites.

Based on consumers’ intention of future use, fintech adoption could increase to an average of 52 per cent globally, explained Gulamhuseinwala. The highest proportional increases of intended use among consumers is expected in South Africa, Mexico and Singapore.

Within Australia, fintech adoption looks poised to continue growing with 43 per cent of digitally-active customers stating that they intend to use it in the future.

“Interestingly, while adoption will continue to increase among young Australian adults, usage is also expected to increase among older generations who are warming to idea of conducting financial transactions digitally,” the survey found.

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