What is Driving
the Fintech Boom
THE BROADER FINTECH CATEGORY
CAN BE SEGMENTED INTO FOUR VARIANTS
McKinsey & Company | Source: McKinsey analysis
Aside for the aforementioned catalyst that was the 2008 credit crisis, a number of market forces are creating the ideal ecosystem for fintechs to flourish, whether they are challenger banks or online loan providers.
1.1 ACCELERATION OF THE MOBILE ECONOMY
DIGITAL AROUND THE WORLD IN 2018
The world’s ongoing appetite for smartphone use is without a doubt driving the transition from a cash-driven society to one that favours digitized financial services. According to the GMSA 2019 report of the state of the mobile economy, the number of mobile internet users is expected to reach 5 Billion by 2025, growing at a CAGR of 4.8%.
And the list of digitized financial services continues to grow. While nobody would have imagined using a QR code to say, pay for an electricity bill a decade ago, it is just one of the numerous processes facilitated by mobile adoption, along with loan application, mobile banking and insurance purchases, amongst others.
1.2 INCREASE IN PAYMENT CHANNELS
These days, even your local corner coffee shop needs to offer in-store as well as desktop and mobile ordering options. This means accepting physical payment in cash, credit, debit, gift cards, as well as digital payments from mobile wallets on phones and wearables, money transfers from apps, and sometimes even in a variety of cryptocurrencies.
Here is, for instance, a list of the payment methods accepted at Starbucks, according to their website:
- Gift cards
- Starbucks Mobile App
- Chase Pay
- Apple Pay
- Visa Checkout
- Credit Cards