Canadian consumers are still lagging much of the rest of the world in their use of so-called financial technology (fintech) firms or, but there are signs that's starting to change, according to new research from Ernst & Young Global Ltd. (EY).
EY's latest Fintech Adoption Index survey found that Canada has one of the lowest fintech adoption rates in the world. Only 18% of survey participants in Canada said they have used two or more fintech services in the past six months compared with 33% globally.
The primary reason for the relatively low penetration for fintech in Canada, the EY survey found, is lack of consumer awareness. However, the survey also shows that fintech familiarity is improving — and awareness is expected to increase rapidly in the coming years, eventually boosting the adoption rate to 34%.
Indeed, fintech usage has already increased from just 8% in 2015. "The trend means both traditional banks and fintechs are feeling the pressure to develop simpler, more transparent, customer-centric financial services products," says EY in a news release.
"Canadians know more about the fintech options available than they did two years ago, and this trend is going to continue," says Ron Stokes, EY Canada's fintech leader, in a statement. "When it comes to banks and fintechs, we're seeing what used to be a competitive mindset turn into a desire to collaborate. It's becoming clear that working for mutual benefit, rather than competing with each other, will result in more meaningful innovations, faster."
The second most cited reason that survey participants gave for not using a fintech is that they prefer to use a traditional firm, the report found: "This attachment to traditional players means fintechs have to double down to build their brands and establish themselves in this competitive market."
The report was based on more than 22,000 online interviews with digitally active consumers in 20 markets, including more than 1,000 survey participants in Canada. EY Sweeney conducted the study in March and April.
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