FinTech services are gradually finding new customers in Canada but have two important barriers to overcome.
As challengers work hard to disrupt payments solutions and other traditional financial transactions including mortgages, a new survey from EY shows that there has been a 32% rise in the use of FinTech in Canada over the past two years with most Canadians using at least one for payments and money transfer.
"FinTech adoption has evolved significantly in Canada over the past two years alongside the evolution of customer priorities and the rise of money transfers and payments," says Ron Stokes, EY Canada FinTech Leader. "FinTechs are no longer seen as just disrupters to the traditional financial services industry — they're sophisticated competitors, ready to meet the changing expectations and needs of customers."
It’s all about trust
However, FinTechs operating in Canada lag their global peers in adoption rates with awareness one of the challenges for the challengers.
But a bigger issue is trust.
In EY’s 2017 survey, trust was the least cited reason for respondents not using a FinTech; in 2019 it is one of the most cited.
"Both adopters and non-adopters worry about the security of their personal data online and demonstrate greater trust in traditional institutions and providers who offer face-to-face interactions," says Stokes.
Not that trust can’t be gained, but it is likely to mean partnering with incumbent financial institutions.
"Even though non-financial services companies have led the way in deploying new technologies to deliver innovative services while raising the bar on consumer expectations, they do not yet have the full confidence of consumers when it comes to providing financial services on their own," says Stokes. "Our findings show that there is a trust gap that can create opportunities for both incumbent financial institutions and their FinTech competitors."