LONDON–With new fintech entrants going after every piece of the banking value chain, GlobalData has released a new report examining the six trends that are helping drive fintech growth.
According to GlobalData, the new report, ‘Fintech – Thematic Research’, reveals the critical enabler for fintech is friction and unfulfilled consumer needs.
Below are the key fintech customer trends enabling fintech growth, as identified by GlobalData.
Lack of Trust
“Many consumers do not trust their bank to treat them fairly and honestly. The single most important criterion when selecting financial services providers globally is ‘fair fees and charges.’ This is more important than even ‘quick and easy to do business with’ according to our survey data.”
Promiscuous
“Consumers are more empowered, able to compare and contrast products from different providers. In 2019, customers are more likely than ever to hold financial products from multiple different providers,” GlobalData said. “However, research from Monzo suggests that customers will consider whichever app they primarily use to manage underlying accounts as their ‘primary provider’.”
Comfortable Sharing Data and Using Mobile
“Many customers remain closed to open banking. However, in other industries, willingness to share data exists in direct correlation to the benefits received. This indicates just how quickly adoption could change if new entrants demonstrate what open banking could mean. Examples include access to more credit, on better terms, or better digital financial advice,” GlobalData stated.
Many People are Excluded from Mainstream Financial Services
According to the GlobalData analysis, “There are approximately two-billion unbanked individuals globally. In developed economies, many people are employed in the gig economy, or are entrepreneurs. For this sector, stable monthly incomes are difficult to get and even harder to prove – denying them access to mainstream credit.
“Many bank risk models discriminate against women because historically they did not work or only worked part-time. In the US, traditional lenders deny black and Hispanic mortgage applicants at significantly higher rates than white applicants, according to a recent report from The Center for Investigative Reporting.”
Heightened Digital Expectations
“Already much digital, banking happens outside of proprietary banking platforms. Examples include Facebook Messenger, Twitter and WeChat, where customers can receive a service and even access products. All these non-banking experiences raise the expectations customers have for traditional bank providers – especially around a more personalized experience,” GlobalData said.
Green Investing and Corporate Social Responsibility
“News mentions for terms such as impact investing have risen steadily. Yet our research suggests that only 2% of consumers globally indicate that supporting ethical causes are important criteria when selecting providers (a figure that rises to 3% among millennials),” GlobalData said. “Already new digital banks like Aspiration lead with taglines such as ‘we don’t use your deposits to fund oil pipelines’. Digital money managers could tap into this trend by guiding consumer spending towards ethical merchants, for example.”