TORONTO – Business consultancy firm EY says it believes the challenge to traditional banks from financial technology, or fintechs, will accelerate rapidly this year.
EY says that until now Canadians have been slow to embrace offerings from companies such as robo-advisers and online lenders.
Citing its own recent survey, it found that only 8.2 per cent of consumers who are active online have used at least two fintech products within the past six months — much lower than adoption rates of 16.5 per cent in the United States, 14.3 per cent in the United Kingdom and 29.1 per cent in Hong Kong.
However, EY says that’s bound to change and suggests in a new report that the adoption of fintech services among Canadians will triple over the next 12 months.
Lack of awareness about the existence of the products was cited by more than half, or 57.2 per cent, of respondents in the survey who had not embraced fintech offerings. Meanwhile, only 10.3 per cent of non-adopters cited lack of trust in fintech companies.
EY says the fact that it’s lack of awareness — not lack of trust — that’s hindering the use of financial technology products suggests that more Canadians will embrace fintech once they find out about it.
Gregory Smith, a partner with EY’s financial services advisory practice, says fintech users tend to be young and wealthy — an important demographic for the banks.
“A big piece of the customer pie will be at stake here,” Smith said in a statement.
Smith says financial services institutions will need to collaborate with the fintech community and speed up the development of digital products or risk losing market share.
The online survey of 2,016 Canadians was conducted between Sept. 1, 2015, to Oct. 6, 2015. The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.