Financial technology services have become mainstream and can be expected to proliferate and mature in the coming years.
Research by EY shows that money transfer and payments were the most commonly used fintech services, with others including savings and investments, budgeting and financial planning, insurance and borrowing services.
EY interviewed more than 27,000 consumers in 27 markets for its Global Fintech Adoption Index 2019, finding that fintech had grown rapidly and had “achieved initial mass adoption”.
Fintech adoption has been slower in Bermuda than in many places in the world, according to Chris Maiato, EY partner and leader of the firm’s Bermuda, Bahamas, BVI and Cayman Islands advisory practice.
“Bermuda is aligned with global trends in payments and online transfers, but we don’t have financial planning or insurance services — however, some are looking at that,” Mr Maiato said. The ability to buy insurance or apply for a loan online or on a mobile phone is becoming increasingly offered to consumers around the world and Bermudian consumers will expect it too.
Mr Maiato said the fintech trend had evolved from new players disrupting the sector.
“Many start-ups have grown into more sophisticated organisations and some of them have been bought out by mainstream players,” Mr Maiato said.
“The pace of change is dramatic and even faster than we were expecting.”
He added that so far, the banks were the main drivers of fintech offerings on the island.
Some lending services, such as Rocket and Lending Tree, have proved successful elsewhere. And he expected Bermuda’s banks to be at the forefront of offering similar services themselves locally.
The survey found that globally, many financial incumbents were offering fintech services of their own. Furthermore, the interaction between challengers, established financial companies and players from outside the financial industry, such as wireless carriers and retailers, was forming “fintech ecosystems that are replacing traditional bilateral partnerships”.
While fintech payments firms like PayPal are being used by many island residents, the island is still not a big user of peer-to-peer services, which use online applications to transfer money directly from one party to another without a bank being involved, Mr Maiato said.
He described Facebook’s launch last month of its own cryptocurrency, Libra, as significant. “It’s a big move in the market,” Mr Maiato said, “because of the pervasiveness of their global network.
“From a regulatory standpoint, globally, there are a lot of questions to be answered and a lot of unknowns.”
Facebook would likely speed up the adoption of fintech, utilising its namesake and Instagram platforms, as it moved from a social media company to marketplace, he added.
Usage of fintech services by small and medium-size businesses is on the rise, the report found.
Over the next five years, Mr Maiato said he expected more companies to be operating off social media platforms and exploring ways to increasingly offer their goods and services digitally.