25 Statistics on Digital Finance and Its Impact on Global Economy
The finance technology industry continues to expand and disrupt various markets. Because of the COVID-19 pandemic in 2020, the fintech market saw huge growth and helped provide financial access to individuals and businesses in a world that was put on pause and in isolation.
Moreover, many digital finance players made money management more accessible for people, especially since there’s an influx of individuals using finance apps during the pandemic. Businesses started offering various online payment options as an alternative besides bank transfer and cash, and other companies implemented blockchain technology into their operations.
As you can see, fintech is the future, and the digital economy in this industry will only continue to move forward from here. Take a look at some interesting figures and data that prove how big of an impact fintech has on the world.
The global financial services market is projected to rise from $20.4 trillion in 2020 to $22.5 trillion in 2021 at a compound annual growth rate (CAGR) of about 9.9%. (The Business Research Company, 2020)
This expected growth is based on the efforts of businesses adjusting their operations as they recover from the pandemic’s impact and operational challenges. By 2025, the fintech market is also expected to reach $28.5 trillion.
COVID-19 spurred the adoption of fintech, such that 73% of Americans view fintech as part of “the new normal.” (Plaid, 2020)
During this challenging time, when the world saw the worst economic crisis after the Great Depression, fintech allowed people to manage their money without going to the bank. It provided some control in a time when everything is uncertain. The survey respondents say they will continue to use digital management even when the health crisis blows over.
A survey shows that 39% of companies are making fintech adoption a high priority, highlighting the worldwide demand for a more innovative financial landscape. (JD Spura, 2020)
Many decision-makers across the accounting, banking, financial services, investment, and insurance industries rank data and analytics as their primary reason for fintech adoption, stressing the significance of analytical data around financial performance, trends, and developments.
Fintech firms in digital asset exchanges, payments, savings, and wealth management reported growth in transaction numbers (13%) and volumes (11%) in 2020. (World Bank, 2020)
According to a survey that gathered 1,385 firms, the fintech industry has been significantly resilient and adaptable despite the global health crisis. Many fintech services contributed to pandemic relief operations and served businesses of all shapes and sizes. The pandemic increased the demand for and accelerated how people use digital finance.
In the U.S., 60% of credit unions and 49% of banks believe fintech partnership is important. (TIPALTI, 2020)
Fintech collaborations provide benefits for all parties involved. The use of mobile devices and online services, cloud development, and data security are some of the technological changes that reflect on people’s banking behaviors. With these continued partnerships, the financial services industry and technology sector will keep expanding in the future.
Mobile Banking Statistics
By 2026, digital banking will reach about 4.2 billion people, or 53% of the global population. (Juniper Research, 2021).
A new study finds that the total number of people who use digital banking systems will reach 3.6 billion come 2024—a dramatic increase (54%) from 2.4 billion in 2020. The significant growth will be propelled by the upswing of digital-only banks and established financial institutions’ current efforts to keep up with the digital transformation.
On average, users have 2.5 finance apps installed on their smartphones. (Google, 2016)
We are living in a mobile-first era. Naturally, companies, including financial entities, realize that smartphones serve as a convenient and essential tool that links them to consumers.
Having finance apps on smartphones is like having their banks as constant companions. They can check their accounts, monitor the status of their investments, review their transaction history, automate their bill payments, and send and receive money.
In 2023, the total transaction value of digital payments is expected to reach $9.46 trillion. (Statista)
One of the biggest fintech products is digital payment; it is the driving force of the fintech market. Digital payment services provide a platform for the unbanked and underbanked population since many of these services are being offered by non-bank entities.
Many tech players create services (food delivery or ride-hailing services) backed by e-wallets or other digital payment methods. At the same time, some businesses partner with digital wallet services for customer acquisition.
Sending and receiving money from one account to another, depositing a check, and paying off loans and utility bills—these are some of the standard features of mobile banking and e-wallets. Because of the convenience, speed, and end-to-end customer experience (e.g., personalized alerts) these tools offer, it’s no wonder why people of different age groups are drawn to go paperless and use these channels.
59% of Americans are utilizing more fintech applications to handle their finances than pre-COVID-19 days (Plaid, 2020)
Using these digital apps and relying on them for their day-to-day financial needs during the toughest times prove that money management can be easier and more manageable. The respondents say they wouldn’t have been able to keep up with their finances amid the pandemic without digital apps, products, and services.
Local Fintech Industry Statistics
87% of Filipinos increased their usage of digital payments during the pandemic (Fintech News PH, 2020)
The restriction of movement due to community quarantine measures spiked the usage of digital services in the country. Banks and several digital financial services saw a massive rise in downloads and use of their mobile apps. For instance, GCash, the leading mobile wallet platform, reported a 1000% rise in money transfer due to the pandemic.
The Philippines currently houses more than 190 fintech companies, offering lending (24%), payments (21%), digital wallets (12%), and remittances (12%). (Fintech News PH, 2020)
The country’s fintech landscape is overflowing with innovative entrepreneurs aiming to bridge the gap within the financial sector, more so due to the pandemic. Moreover, the Bangko Sentral ng Pilipinas (BSP) reported that Filipino adults with finance accounts rose from 23% in 2017 to 29% in 2019, attributing the growth to e-money accounts, which increased to 8% in 2019 from only 1% in 2017.
There are 20 million registered e-money users in the Philippines, with over 63,000 partner merchants accepting e-money payments. (KMC, 2020)
The figure overtakes the number of credit card holders, which is expected from a country with 71% active internet users and a good majority having mobile subscriptions. By adopting fintech solutions, businesses can deliver more convenient and seamless financial activities to consumers and companies.
Survey shows that the Philippines rank third among the highest rates of cryptocurrency use out of 74 countries. (World Economic Forum, 2021)
In the Philippines, BSP approved several crypto exchanges to operate as “remittance and transfer companies.” As of July 2020, the Philippines has 16 cryptocurrency exchanges approved by the central bank. Unionbank already has a Bitcoin ATM installed in Makati, proving that digital coins are slowly penetrating mainstream markets.
A report shows that among Filipinos, 32% said they owned crypto assets while 14% were initial coin offering (ICO) investors. (Philippine Daily Inquirer, 2019)
About 51% of cryptocurrency holders were between 45 and 54, probably male, employed, and had a master’s or doctorate degree. Filipinos dive into crypto due to curiosity (40%), to use as legal tender for online purchases (39%), and to make money quickly (36%).
The Philippine ecommerce market is set to reach $4.4 billion in revenue in 2021. (Statista, 2020)
As the ecommerce industry grows at a rapid pace, so does the fintech industry. Fintech provides micro, small, and medium enterprises (MSMEs) in the country with convenient features and services that help them meet customers’ needs, allowing the merchants to serve more people.
Online shopping in the Philippines rose by 57% in 2020. (Business Mirror, 2021)
The Philippines’ ecommerce sector saw a dramatic increase in activity in 2020, when most people quarantined at home have turned to online purchasing. A report shows that in the second quarter of 2020, Filipinos spent 53% more time on shopping apps, with 4.9 billion sessions in the platforms. As ecommerce use increases, the use of digital payments, including contactless payments, shot up as well.
In June 2020, retail ecommerce traffic saw a record 22 billion monthly visits globally. (Statista, 2021)
The pandemic significantly influenced the ecommerce and online shopping behavior of consumers all over the world. The demand in ecommerce traffic was outstandingly high for daily necessities like groceries, clothing, and retail tech items.
In the Philippines, Lazada’s market share stands at 59%, with more than 34 million visits in a month. (Philippine Daily Inquirer, 2020)
In mobile ecommerce apps, Lazada, Shopee, Zalora, and BeautyMNL are the most used ecommerce platforms. Lazada is followed by Shopee, with over 19 million monthly visits and 33% market share, then Zalora, with almost two million visitors, and BeautyMNL, with 830,000 visits. The PH market also ranks third among six markets in Southeast Asia for the average duration of visits (10 minutes, two seconds).
Online retail giant Amazon leads the global ranking of online retail websites in terms of traffic. (Statista, 2021)
Online shoppers can visit various ecommerce platforms to purchase and compare prices or services. Amazon offers multiple goods, including consumer electronics, e-retail, and computing services, registering more than 5.2 billion unique visitors in June 2020.
Online Pawning Statistics
Peer-to-peer (P2P) or digital lending, another segment of fintech, is worth US$43.16 billion in 2018 and expected to rise to US$567.3 billion in 2026 with a CAGR of 26.6%. (Reports and Data, 2019)
This type of lending refers to the process of loan financing that enables various individuals to borrow and lend money using an online channel. The interest in P2P lending is lower compared to traditional lending systems. P2P lending is set up for remarkable growth due to the rise in online applications and banking systems.
According to BSP, 51.2 million Filipinos remain unbanked. (The Philippine Star, 2020)
Since many unbanked Filipinos still don’t have access to traditional loans, they resort to online pawning like PawnHero, which was the first online pawnshop in the Philippines. Online pawnshops have become their salvation during shortcomings, for they only require valid identification and collateral to provide credit.
The Philippines is home to 18,500 pawnshops. (Quartz, 2016)
That’s roughly one pawnshop for every 3,200 adults. Many Filipinos patronize pawnshops for emergency loans. The age of the internet revolutionized the pawnshop industry in the Southeast Asian region. Now, people can simply take a photo, submit their application, and wait for the quote offered. Typically, online pawnshops charge interest rates as low as 2.99%.
In the U.S., the most commonly pawned item is electronics, which accounts for 30% of requests on PawnGuru. (Statista, 2018)
Next to electronics, Americans also pawn antiques and collectibles, designer wear and handbags, and more when they need cash. PawnGuru makes it easier for Americans to sell or pawn used goods through their online services. In the Philippines, jewelry, especially gold or gold-plated, was observed as the most pawned item as of 2015.
In 2020, the number of internet users in the Philippines ballooned to approximately 73.9 million. (Statista, 2021)
Apart from the unbanked sector, Filipino adults who regularly use the internet are the target market of online pawnbroking services. The innovative pawning service offers a fair and convenient way for those who wish to overcome their short-term cash needs without the need to leave their homes.
The rising trends and digital transformation of financial markets will continue to accelerate. Many developing countries transitioned to digital finance as communities observe lockdowns. The COVID-19 pandemic, albeit the cause of world economic breakdowns, spearheaded the rapid change in how people manage and interact with their finances.
If you’re interested in reading more about finance and online pawning, feel free to browse for more articles at PawnHero’s blog.