China is the undisputed world leader when it comes to the adoption of financial technology (fintech), but second-place India is hot on its heels and is poised to overtake it in the near future, according to a study by
EY.
The study, entitled
“EY Fintech Adoption Index 2017”, covers five categories of financial technology: money transfer and payments, borrowing, savings and investment, financial planning, and insurance. China leads the world with a 69% total adoption rate, more than double the global average of 33%. India is second with 52%, and these two markets are the only ones to break into the “late majority” stage, based on the Rogers’ innovation adoption curve.
According to EY, fintech will still grow in China, but growth in India will be more dramatic. Projections show that China is expected to reach a 77% adoption rate in the near future, but India is expected to overtake it at 80%. However, China doesn’t need to worry about losing the number one spot, as its market still stands to benefit from rapid growth in India. That’s because Chinese firms are some of the top investors in the Indian fintech scene.
For now, China leads the world in four out of five fintech categories – except in insurance, where it is in third place. India, on the other hand, is king in insurance technology, with an adoption rate of 47%. It is followed by the UK at 43%, then China at 38%.
A report by Technode pointed out that Chinese e-commerce giant Alibaba is the top shareholder in One97, the parent company of Paytm, a leading mobile payments and e-commerce platform in India. The two firms are also working together to purchase a 20% stake in Bigbasket, a leading online grocery store in India. Meanwhile, Tencent recently participated in a US$1.4 billion funding round in Flipkart, a leading e-commerce platform in India, and it is also rumoured to be investing in MobiKwik, India’s second-largest electronic wallet service.
The fintech trend extends to other emerging economies, including Brazil, China, India, Mexico, and South Africa having an average adoption rate of 46%, well above the global average.
“This is because fintech firms excel at tapping into the tech-literate, but financially underserved population, of which there are particularly high ratios in emerging countries,” the report stated.
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