New research from Plaid, an open finance network and payments platform, and The Harris Poll, reveals that fintech use and adoption has reached mass scale in the UK, with an 86% consumer adoption rate.
From the use of QR codes to digital banking, the COVID-19 pandemic has accelerated consumer adoption of fintech, particularly in the realm of payments. The Fintech Effect, Plaid’s 2021 annual report, found that UK consumers on average use 2.8 fintech products and services, with the average UK user managing 67% of their finances online. When asked, current users expect to increase the number of apps and services they use to 3.5 over the next six months, signaling digital finance adoption will continue to grow.
In addition, Plaid’s report found that consumers find utility in open banking and it has made a positive impact on their financial lives; 76% of Brits now feel confident using technology to manage their finances. In addition, UK consumers reported that using fintech had helped them benefit by saving time (59%) and money (42%), as well as greater stress reduction (36%).
Beyond open banking’s impact, the research highlights the next opportunity area for growth. Of all the functions available to users, payment services are the most popular fintech use case application amongst UK consumers with 79% stating that they use fintech applications for banking and to pay for goods and services. This signals the opportunity for digital payment providers to expand their reach and scale as cash usage declines and the demand for alternative payment channels continues to increase. In fact, UK consumers now have more choice available to them when making payments than in any previous generation.
Keith Grose, Head of International, said: “This has been a ground-breaking year for fintech as Covid-19 pandemic led people to turn to digital solutions. This accelerated the inevitable and now fintech has reached mass adoption faster than almost any service besides the internet itself. Moving forward, open banking will be a core part of digital life— and it won’t be just about understanding your finances but putting them to better use via new, digital payment methods.”
Kat Cloud, Policy Lead, UK, said: “In the UK, regulators have made great strides creating an environment that allows open banking to flourish. Underpinning this shift is the fact that open banking in the UK is spearheaded by the revised payment services directive (PSD2) and the CMA’s Open Banking Order. But, plenty more remains to be done to unlock the true potential of the fintech sector – particularly when it comes to realising the potential of open finance.
“Specific reforms including removing the 90-day authentication requirements currently foisted on users of open banking, and an element of compulsion for real-time data sharing by incumbent data holders, currently pose a risk for the UK as a hotbed for innovation. For these reasons, Plaid strongly supports calls on the government to fast track a ‘smart data right’ that enables consumers to control their data, opening up the potential of open finance.”