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Consumer Attitudes Toward FinTech - US - May 2016

FinTech start-ups are fundamentally altering how consumers interact with financial services by delivering these services faster and by factoring in an ever-growing volume and variety of data for assessing the value of potential customers. Traditional finance brands are also leveraging the innovations that have emerged from the FinTech scene. Mobile services currently lead the charge, but there are many more opportunities to explore.

This report examines the following areas:

  • Consumer awareness for new financial tech is low
  • Majority of consumers satisfied with current financial services
  • Traditional touchpoints most preferred for engaging with financial services
  • Consumers trust traditional finance, but security threats are growing

One of the main challenges for any FinTech service will be increasing consumer awareness, especially since much of the value in many of these services stems from processes and technology that operates behind the scenes. This will make transparency and consumer trust increasingly key issues as FinTech matures, as consumers will need to better understand the value of using alternative financial services when they tend to be satisfied with their current providers. Despite low awareness of specific FinTech services, the impact on the finance market is considerable, as many of the innovations are designed to fundamentally alter the way users interact with financial services.

Further showcasing the challenges in the FinTech market is that the majority of consumers say they are satisfied with their current financial services. Established financial institutions have also built up trust in their brands and offerings. Given the personal and sensitive nature of financial information, companies entering the market need to start with a foundation of building trust, an aspect that will also be important for business-to-business service providers.

FinTech includes any service or technology that has altered the way consumers interact with, receive, or manage their finances. This Report focuses on four broad categories of FinTech:

  • User experience
  • Alternate lending
  • Alternate payment
  • Security

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Consumer awareness for new financial tech is low
            • Figure 1: Knowledge and usage of FinTech services, March 2016
          • Majority of consumers satisfied with current financial services
            • Figure 2: Consumers’ trust and satisfaction with financial services, March 2016
          • Traditional touchpoints most preferred for engaging with financial services
            • Figure 3: Methods of interacting with financial services, March 2016
          • Consumers trust traditional finance, but security threats are growing
            • Figure 4: Consumers trust in stores to protect payment information, by age, March 2016
          • The opportunities
            • Partnerships between traditional finance and FinTech
              • Help consumers better understand finance
                • Figure 5: Interest in advice from financial services providers, by age, March 2016
              • Tap into consumer desire to be strategic spenders
                • Figure 6: Perceptions regarding spending money, March 2016
              • Strong cybersecurity encompasses technology, people and processes
                • What it means
                • The Market – What You Need to Know

                  • Regulators turning their attention to the FinTech market
                    • Consumer confidence stable
                    • Market Factors

                      • Regulatory pressure may not come immediately, but will have dramatic implications for FinTech
                        • Consumer economic sentiment an opportunity for FinTech
                        • Key Players – What You Need to Know

                          • Faster and easier interaction with financial services driving change
                            • Synchrony Financial takes on user experience
                              • Envestnet | Yodlee addresses need for smaller loans
                                • Akouba discusses the digitalization of lending
                                  • WallScott and Covenant Security Solutions develop framework for protecting data
                                  • What’s Changing?

                                    • How FinTech is changing financial services
                                    • Industry Perspective on User Experience – Synchrony Financial

                                      • Synchrony Financial’s top themes influencing financial services
                                        • The integration of technology and expertise
                                          • User experience highlight: The integration of health and finance with the CareCredit Mobile App
                                              • Figure 7: Knowledge and usage of FinTech services, March 2016
                                            • What it means for consumers
                                              • Figure 8: Methods of interacting with financial services, by age, March 2016
                                          • Industry Perspective on Lending – Envestnet | Yodlee

                                            • How lending changed after 2008
                                              • Lending highlight: Kabbage offers loans in Spain with Yodlee’s Aggregation API
                                                • What it means for consumers
                                                  • Figure 9: Perception of difficulty in building a credit score, by generation, March 2016
                                              • Industry Perspective on Lending – Akouba

                                                • Lending, the final digitalization frontier
                                                  • Finance and the changing technology landscape
                                                    • What it means for consumers
                                                    • Industry Perspective on Cybersecurity – WallScott Security Solutions and Covenant Security Solutions

                                                      • The changing face of security and what it means for finance
                                                        • Cybersecurity Highlight: Covenant Security Solutions
                                                          • What it Means for Consumers
                                                            • Figure 10: Consumers’ trust and satisfaction with financial services, March 2016
                                                        • What’s Next?

                                                          • FinTech to face growing pains with integration
                                                            • The arms race of algorithms
                                                            • The Consumer – What You Need to Know

                                                              • Omnichannel reaches the finance sector
                                                                • Awareness for FinTech is low
                                                                  • Consumers cautious about spending
                                                                    • Mobile payment is the future for one-fourth of consumers
                                                                    • Methods of Interacting with Financial Services

                                                                      • Traditional touchpoints are still important, but change is coming
                                                                        • Figure 11: Methods of interacting with financial services, March 2016
                                                                      • Personal engagement still important for younger consumers
                                                                        • Figure 12: Methods of interacting with financial services, by age, March 2016
                                                                      • Hispanics a key audience for mobile financial services
                                                                        • Figure 13: Methods of interacting with financial services, by age, March 2016
                                                                    • Consumers’ Relationships with Financial Services

                                                                      • High level of satisfaction and trust in traditional financial services
                                                                          • Figure 14: consumers’ trust and satisfaction with financial services, March 2016
                                                                        • Younger consumers still want help with money management
                                                                            • Figure 15: Consumers’ interest in advice from financial services providers, by age, March 2016
                                                                          • Desire for alternatives to banks rises with income
                                                                              • Figure 16: Consumers’ interest in advice from financial services providers, by household income, March 2016
                                                                            • Fewer Blacks invest than are interested
                                                                                • Figure 17: Consumers’ interest in advice from financial services providers, by race/Hispanic origin, March 2016
                                                                            • Consumers’ Perceptions of How They Spend Money

                                                                              • Most consumers are cautious about spending money
                                                                                • Figure 18: Perceptions regarding spending money, March 2016
                                                                              • Urban consumers more optimistic about spending
                                                                                  • Figure 19: Perceptions regarding spending money, by type of living area March 2016
                                                                                • Hispanics show heightened tendency toward aspirational spending
                                                                                    • Figure 20: Perceptions regarding spending money, by Hispanic origin, March 2016
                                                                                • Usage and Awareness of FinTech Services

                                                                                  • Minority of consumers aware of FinTech services
                                                                                    • Figure 21: Knowledge and usage of FinTech services, March 2016
                                                                                  • Usage and interest gap in mobile payment among older consumers
                                                                                    • Figure 22: Knowledge and usage of mobile payment, by age, March 2016
                                                                                  • FinTech shows limited reach outside California and New York
                                                                                    • Figure 23: Usage and interest in FinTech services, by home state, March 2016
                                                                                • Attitudes toward Traditional Financial Services

                                                                                  • Entering payment information online still cumbersome
                                                                                    • Figure 24: Consumer frustration with online payment information, by gender and age, March 2016
                                                                                  • Could retail do more to protect payment information?
                                                                                    • Figure 25: Consumers trust in stores to protect payment information, by age, March 2016
                                                                                  • Parents a key audience for alternate credit
                                                                                    • Figure 26: Interest in lower-interest credit, by parental status, March 2016
                                                                                  • Retail adoption a barrier for mobile payment
                                                                                    • Figure 27: Interest in greater mobile payment adoption, by household income, March 2016
                                                                                • Attitudes toward Financial Services and Technology

                                                                                  • The mobile payment future
                                                                                    • Figure 28: interest in greater mobile payment adoption, by household income, March 2016
                                                                                  • Younger consumers ready for technology-driven finance advice
                                                                                    • Figure 29: Interest in greater mobile payment adoption, by household income, March 2016
                                                                                  • Perception of tech-savviness important for higher-income households
                                                                                    • Figure 30: Interest in greater mobile payment adoption, by household income, March 2016
                                                                                • Appendix – Data Sources and Abbreviations

                                                                                  • Data sources
                                                                                    • Consumer survey data
                                                                                      • FinTech Industry Perspectives
                                                                                        • Abbreviations and terms
                                                                                          • Abbreviations
                                                                                            • Terms
                                                                                            • Appendix – Consumer

                                                                                              • Hispanics’ financial outlook
                                                                                                • Figure 31: Hispanics’ past 12 months financial review – Net result (% better off minus % worse off), by household income, October 2014-December 2015
                                                                                                • Figure 32: Hispanics’ next 12 months financial outlook – Net result (% better off minus % worse off), by household income, October 2014-December 2015
                                                                                              • Ownership of financial products
                                                                                                • Figure 33: Ownership of financial products, by household income, March 2016
                                                                                                • Figure 34: Ownership of financial products, by household income, March 2016 (cont.)
                                                                                              • Knowledge of FinTech Services
                                                                                                • Figure 35: Knowledge and usage of FinTech Services, March 2016

                                                                                            Companies Covered

                                                                                            To learn more about the companies covered in this report please contact us.

                                                                                            Consumer Attitudes Toward FinTech - US - May 2016

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