by Ben White & John C. Pitts, Plaid
Even before COVID-19, financial security was a major challenge for most Americans. Money is consistently Americans’ leading cause of stress. Three-quarters live paycheck to paycheck and just 29% are considered financially healthy, according to Financial Health Network. Financial services play a major role in helping consumers manage and make the most of their money. Clearly, there’s room for improvement to ensure the financial services system supports everyone.
At Plaid, we believe that giving people access to financial technology (fintech) can help them improve their financial lives. Ten years into fintech’s existence, we wanted to understand how consumers see fintech impacting their lives. So we worked with The Harris Poll to ask consumers how they’re using fintech, how they feel about it, and what impact it’s making on their relationship to their money.
The results are outlined in The Fintech Effect, a new Plaid research series designed to provide insights and analysis about the impact fintech is having on both consumers and businesses.
Three major benefits that consumers expressed in the survey, include:
- Fintech improves their financial well-being
- Fintech expands their access to the financial ecosystem, and
- Fintech enables them to engage more deeply with their finances
82% of consumers say they get better results with fintech
Consumers feel fintech improves their financial well-being. They report that fintech saves them time (55%) and money (45%), increases their control and understanding of their finances (73%), and reduces their financial stress (68%).
Fintech users reported a median savings of $360 in bank fees and interest and almost 4 hours per week in time
As we’ve suspected, our research shows that fintech helps consumers access products that meet their needs. Half of consumers living paycheck to paycheck use fintech to manage their short-term financial challenges (47%). A third of all consumers say they didn’t know how to start building a savings habit until they used fintech (32%).
76% of consumers said fintech makes it easier to try new financial areas
Consumers start using fintech to get a full picture of their finances, but their engagement goes much further. They experience positive financial outcomes as a result of adopting fintech, so they feel comfortable adopting more tools to meet their financial needs. Increased usage also appears to correlate with better results. Consumers who use five or more fintech apps say they see outsize benefits relative to those using only one or two.
With fintech as the new normal after COVID-19, the report revealed that consumers are actively embracing these tools and realizing increasing benefits. For the industry, the opportunity to create a more efficient, accessible and equitable financial system is wide open. The global pandemic has accelerated fintech adoption – growth projected to take years has taken place over mere months – but the true digital transformation of finance is just beginning.
In the future, every company can incorporate fintech to benefit its customers. Innovation will come from traditional financial companies, new entrants, and established companies from outside of finance. Trust will be paramount. The winners will be those who lean into the connected and consumer-centric fintech experiences and help people live better financial lives.