The trend towards digital transformation is accelerating, increasing the importance of FinTech adoption.
At a glance
- Organisations that integrate financial technology (FinTech) into their processes agree that the key motivation is to improve business efficiency.
- Other key drivers are cost savings and the need to form a better understanding of and improve customer experience.
- When incorporating FinTech into business processes, it is important to encourage a strong organisation-wide understanding of the trends, potential and risks.
By Jonathan Ng
Improved business efficiency appears to be the key driver of business financial technology (FinTech) adoption, according to CPA Australia’s Business FinTech Usage Survey.
The survey of 573 members in Mainland China, Hong Kong, Malaysia and Singapore looked to gauge what FinTech (defined as innovative technology or software used to improve the delivery and use of financial services) businesses are using, what advantages this technology drives, and what barriers there are to greater adoption.
The majority of respondents reported that their business had used at least one FinTech product or service in the past 12 months, with Mainland China reporting a greater percentage of businesses using FinTech than the other markets.
This strong uptake of FinTech by businesses looks set to continue, with most respondents in the four markets expecting their business to use at least one FinTech product or service in the next 12 months.
Mobile payment technology most popular FinTech
Mobile payment technology proved to be the most popular FinTech for businesses in all four markets. Overall usage of this FinTech was highest in Mainland China, while Malaysia experienced the largest increase in the usage of mobile payments or digital wallets in the past 12 months.
Use of robo-advisors or chatbots was most popular in Mainland China, with more than half of the respondents saying that their business had used it over the past 12 months.
While the usage of regulatory technology (RegTech) was generally low across the four markets, Hong Kong and Singapore reported relatively higher levels of business use of RegTech over the same period of time.
Usage of blockchain technology by businesses was also low. Given that there are few commercial-scale applications of blockchain at present, this result is not unexpected. However, this may change in the coming years as blockchain technology and applications evolve.
CPA Australia resource:
Banking on Governance, Insuring Sustainability report
Future business FinTech usage
With the COVID-19 pandemic accelerating the shift towards the digitalisation of payment and contactless commerce, it is not surprising that, across all four markets, respondents identified mobile payment technology as the FinTech they believe their businesses are most likely to use over the next 12 months.
With Hong Kong’s regulatory authorities having approved eight virtual banks, such as ZA Bank, Airstar Bank and WeLab Bank, it is little wonder that Hong Kong has the highest percentage of respondents who identified virtual banks as one of the most likely FinTechs their business will use over the next 12 months.
Drivers of FinTech usage
Enhancing operational processes is the major motivator for businesses to adopt FinTech, with “improve efficiency” being the most likely driver of FinTech adoption in all four markets.
The other key drivers of FinTech adoption by business over the past year have been to “better understand and improve the customer experience”, “cost savings”, and “a new way of operating due to COVID-19”.
Barriers to business FinTech adoption
Respondents from all four markets chose cybersecurity concerns as the most likely challenge or barrier to FinTech adoption. This concern was highest in Hong Kong (44 per cent).
More than a third of respondents in Singapore picked a lack of FinTech understanding and knowledge at board and senior management level as a challenge or barrier, the highest among the four markets, with Malaysia coming in a close second. This result parallels the findings of CPA Australia’s Banking on Governance, Insuring Sustainability report, which found that most banks and insurance companies in the Asia-Pacific region do not have a board-level technology committee.
Choosing the right FinTech can potentially improve your efficiency, cut costs and improve the experience for your customers.
Data privacy concerns were identified as a major challenge or barrier in the four markets, with Hong Kong businesses the most likely of the four markets to choose this as barrier to FinTech adoption.
Reflecting the strong demand for FinTech, respondents in Mainland China cited a shortage of FinTech talent as the most likely challenge.
What do the results mean for business?
The key lessons for business from these results are:
- If you are not already using FinTech in your business, start to learn more about it.
- Choosing the right FinTech can potentially improve your efficiency, cut costs and improve the experience for your customers.
- Consider using mobile payment technology to improve your customers’ experiences and to meet changing consumer behaviour.
- Consider establishing a board-level technology committee to improve senior-level understanding of the trends, potential and risks associated with FinTech.
- Enhance your in-house FinTech capability through training programs and by adopting innovative methods to secure top FinTech talent.
- Ensure that the FinTech products or services you use have strong cybersecurity protections and appropriate tools and solutions to protect your customers’ data.
FinTech start-ups can also draw lessons from these results, to help them develop products or services that are more likely to be meet business needs.
These include demonstrating how these businesses’ products and services:
- improve efficiency in work processes
- lead to cost savings
- give businesses a better understanding of customers and improve customer experience
Businesses should also focus on:
- the cybersecurity features of their products or services
- how customer and business data will be protected
- how the FinTech start-up will assist business implementation while supporting and enhancing the product or service.