How fintech apps are helping consumers tackle financial challenges, in 4 charts – Tearsheet

Fintech adoption skyrocketed in 2020 due to Covid-19 restrictions. Forced to stay at home, consumers flocked to funding apps to meet their banking needs. But as lock-in restrictions loosen, will consumers still stick with fintechs?

Plaid’s Fintech Effect 2022 report shows a slight decline in adoption, due to Baby Boomers returning to in-person banking. But the younger generation is sticking with fintech apps, and Gen Z showed an increase in adoption.

The report surveyed fintech consumers in the US and UK to explore why adoption increased by 38% over the past three years. Fintech apps are becoming an important tool for managing personal finances, having supported consumers through three years of global economic challenges.

Currently, eight out of ten consumers use some form of digital financial tool, and half of Americans use apps to manage their finances on a daily basis. Here are the main features from the report:

1. The number of fintech apps per consumer rose, and adoption remained high

• The number of applications used per person increased by 10% year-on-year, from 3 in 2021 to 3.3 in 2022.

• Covid-19 accelerated digital adoption, and the trend continued into 2022, with eight out of ten consumers using some digital financial tool. The figure is somewhat down from 88% in 2021, but shows a significant increase from 2020 (58%).

• There is a 38% increase in fintech adoption from 2020 to 2022. This highlights how fintech is increasingly playing a central role in consumers’ lives.

After COVID shutdowns pushed fintech adoption to near-ubiquity by 2021, reopening of the US and UK economies raised questions about whether digital acceleration would stick. The rising trend over the past three years indicates that fintech’s positive everyday impact has led to a sustained consumer appetite for technology-driven financial innovation.

2. Consumers lean on fintech during economic challenges

• Budgeting and saving are the main goals for American consumers as their financial stress increased due to record inflation, rising interest rates and uncertain markets.

• Staying on top of the budget remained a primary financial concern for more than a third of consumers, rising year-over-year from 31% to 36%.

• But the overall use of budgeting tools remained at one-fifth of consumers (17%), showing significant room for growth.

Consumers use their savings as a buffer against volatility. The study showed that fintech played an important role in helping consumers achieve financial well-being.

3. More than nine out of ten users (93%) see real value in using fintech apps

• Fintech has helped consumers save time, money and stress or recover from a financial failure.

• Around six in ten consumers saved time by using technology (58% in 2022, 60% in 2021, 55% in 2020), and around half saved money (46% in 2022, 46% in 2021, 45% in 2020).

• More consumers are seeking financial expertise. 48% say fintech has helped them understand their finances better and gain more confidence.

For consumers, managing the economy is a major concern. Discovering money management tools has allowed them to save time and money. Some have even reduced stress and recovered from financial failures.

4. Fintech use cases increase and improve consumer financial well-being

• Making online payments remains the highest use among fintech users, with six in ten consumers saying they have used services such as Venmo, PayPal Wallet, Cash App or Zelle, while around half have used mobile payment tools such as Apple Pay and Google Pay.

• The decline in bill payments fell from 56% in 2020 to 53% in 2022. This is largely due to Baby Boomers returning to in-person banking as opposed to managing them digitally.

• Investment apps jumped from 25% to 31% between 2020 and 2021. Adoption remained at around a third of consumers (31%). Millennials represented the highest adoption, showing a significant opportunity for fintech to tap into a growing population of earners.

Fintech brings more people into banking, budgeting, planning and investment services that can help improve financial well-being.