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Fintech is more present in consumers’ lives than ever before. Nearly every U.S. bank or financial institution has a fintech offering. However, barriers to entry still exist and they may be stalling the adoption of some fintech solutions.
Challenges in the Fintech Landscape
As we prepare for 2024, Blumberg Capital recently conducted a survey of 3,000 U.S. consumers over the age of 18 and gathered insights from Blumberg Capital’s CIO Council, a group of advisors consisting of CIOs, CISOs, and IT decision makers, to better understand what barriers to entry exist when it comes to adopting new fintech solutions.
Businesses continue to lean into digital transformation – if they don’t, their competitors will. However, it’s unclear whether their efforts are noticed.
Is adoption slowing or are fintech solutions becoming so embedded in our lives that we don’t think about them?
After a few years of modest adoption, the consumer fintech industry has begun to hit a wall – just over half (55%) of Americans note that they’ve used a fintech solution over the last 12 months in both 2021 and 2023.
Adoption rates are not even across demographics – those earning under $25,000/year are less likely (61%) to use fintech solutions than those earning over $150,000/year (33%). Similarly, adoption across fintech solutions also varies based on demographic. 25% of males vs. 10% of females used fintech solutions for investing and only 15% of boomers are using fintech solutions for basic checking.
The differences in these responses can prove difficult for fintech startups – without a user consensus, there is a blurrier path forward on building a solution that works for everyone. However, Blumberg Capital CIO Council members believe that users may not have an idea of just how much fintech infiltrates their lives – 63% of CIO Council members stated they don’t think people know how much fintech solutions are at work behind the scenes of their everyday purchases and financial transactions.
Consumer Preferences and Trust in Fintech
For fintechs looking to develop consumer-facing solutions, they’ll find useful direction from consumers themselves. When asked to select the financial activities they have the best experience managing through a fintech solution, consumers chose paying friends (41%) and basic checking (37%) as their top choices. To increase adoption, organizations should consider the sentiments of consumers and the actions of competitors when developing fintech solutions. This extends to factors like security, with 1 in 3 Americans responding they used fintech solutions more if they felt they were more secure.
“As competition intensifies and retail investors’ expectations grow, financial institutions are under increasing pressure to stay competitive – looking for innovative ways to expand their offerings,” said Boaz Yaari, CEO of Sharegain, a Blumberg Capital portfolio company. “Partnering with fintechs empowers firms to meet the evolving needs of their customers while significantly reducing time-to-market for new services.”
Partnerships and Trust Building
Consumer trust, and ultimately adoption, in fintech solutions directly impacts their success. For fintech providers, they may improve additional consumer trust by partnering with a larger institution – think Zelle partnering with banks like Chase or Bank of America. Positioning fintech as an added ability or perk for pre-existing entities may improve trust with customers and increase adoption.
For consumer-facing organizations like big-box retailers, incorporating fintech solutions that ease the user experience will likely continue to drive higher sales conversions, increased competition with other retailers, and improved investor satisfaction.
For more data and insights on adoption and attitudes toward fintech, check out our recent post in Blumberg Capital’s Fintech Friday series on how consumers’ financial fitness impacts fintech innovation here.