Voice of the Industry

How the adoption of financial products and services will directly impact commerce

Thursday 21 February 2019 08:27 CET | Voice of the industry

Kendrick Sands, Head of Consumer Finance at Euromonitor International, talks about card and electronic payments, financial service adoption, and their impact on commerce

Growing adoption of financial products and services will directly impact the future of commerce. From 2013 to 2018, there were an additional 1 billion more banked consumers over the age of 15 across the 47 markets Euromonitor International researches, bringing the total to nearly 4 billion. The adoption of financial services can transform consumers’ opportunities both in terms of employment and purchase potential, which can contribute to economic growth.

The growth of the banked population can be directly linked to greater mobile device adoption, in addition to the increased capabilities of mobile devices, retail shifting online, and greater competition amongst financial institutions to expand their customer base. Along with the adoption of financial services, there has been a consistent growth of card and electronic payment value at the expense of cash. Going forward, greater access to financial products and services is expected to significantly impact the future of commerce and payments.

Drivers behind financial service adoption

There are a few key trends that have driven greater financial service adoption over the previous years. These include widespread smartphone adoption and the growth of online retail, a developing fintech sector, and government intervention to lower the cost of financial services or provide incentives for financial institutions to reach more consumers.

Banked status of population 15+ in 47 markets researched by Euromonitor International

Source: Euromonitor International

The number of mobile devices that are considered smartphones has dramatically expanded over the last five years. Only 57% of mobile devices were smartphones in 2013 compared to 84% in 2018, according to Euromonitor International. Smartphones can dramatically expand the world of merchants, potential customers, or financial institutions that are available to consumers. This has contributed to the shifting retail landscape online in both emerging and developed economies. Internet retail sales accounted for 11% of total retail sales in 2018 and are expected to reach 14% by 2022, according to Euromonitor International. In absolute value terms, total internet retailing sales are expected to reach USD 2.6 trillion by 2022.

Source: Euromonitor International

Smartphone development has also allowed many non-traditional payments and financial service companies to compete with traditional banks. The fintech sector has developed products and services that are simple and easy for consumers to use at a much lower cost than mainstream financial institutions in many emerging markets. Without the need of maintaining a legacy branch network and, in some cases, with lower compliance requirements, technology companies can offer the same products at a lower cost, appealing to broader income segments. Both Latin America and Asia Pacific have seen rapid development of fintech sectors leading to falling rates of unbanked consumers and contributing to more card and electronic payment value. China has seen the greatest growth in fintech development and has partially contributed to an increase in the banked population over the age of 15 by 250 million from 2013 to 2018, according to Euromonitor International.

More governments are also taking a proactive approach when it comes to consumer payment policy and financial services, because the benefits of reducing cash payments and increasing financial literacy are becoming well known. The digital trail left by card and electronic transactions can greatly reduce consumers’ abilities to evade taxes, but it also provides additional security for consumers should a transaction be fraudulent. To increase the convenience of card use, governments have required merchants at a certain sales level to accept cards or have provided subsidies for card terminals. As various payment policies achieve their stated objectives of reducing total cash volume, they are more likely to be replicated by other markets further driving card and electronic payments through 2023.

Benefits of banked consumers

Consumers with access to credit can invest and positively impact economic performance in a market. We have seen dramatic growth from the adoption of technology, greater competition in the financial services sector and from effective consumer payment policy. The momentum from the past decade to provide financial products and services to a wider range of consumers contributes to Euromonitor International’s projection of an additional USD 11.8 trillion in consumer card and electronic payment channels by 2023. This growth is expected to come directly at the expense of cash, which, as a portion of total consumer payment value, is projected to drop 10 percentage points over the next five years.

This editorial was first published in our Payments and Commerce Market Guide 2018-2019. The Guide presents the key trends and developments in global and regional payment methods by highlighting the innovation, challenges, and developments in the use of the most important payment methods across geographies and verticals.

About Kendrick Sands

Kendrick Sands is the Head of Consumer Finance Research at Euromonitor International, which he joined in 2010. In his current position, Kendrick coordinates Euromonitor’s consumer finance research, providing strategic analysis and in-depth coverage of financial cards and payments worldwide.


About Euromonitor International

Euromonitor International is the world’s leading independent provider of global business intelligence and strategic market research. We create data and analysis on thousands of products and services around the world. Euromonitor International’s global market research database, Passport, provides statistics, analysis, reports, surveys, and breaking news on industries, countries, and consumers worldwide.

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Keywords: Kendrick Sands, Euromonitor International, card, electronic payments, financial service adoption, commerce, non-traditional payments, smartphone, online retail
Countries: World