Strategy Note /

How emerging market consumers expect the financial services landscape to change

  • Incumbents are strongest in South Africa. Fintech presence is highest in India. Informal channels are popular in Egypt

  • Consumers see fintechs gaining ground by tackling financial exclusion, notably in South Africa, Nigeria, the Philippines

  • Fintechs already dominate mobile payments and have greatest potential in general insurance and business/property loans

How emerging market consumers expect the financial services landscape to change
Rahul Shah
Rahul Shah

Head of Corporate & Thematic Research

Rohit Kumar
Rabail Adwani
Tellimer Research
9 May 2022
Published byTellimer Research

We asked 900 consumers in 14 emerging markets how they currently access financial services and what changes in provision they expect to see over the next three years. Our survey provides an alternative, demand-side perspective on how the retail financial services industry is likely to change.

According to our respondents, fintechs in India and Indonesia have already made solid inroads, but those in Pakistan and South Africa are less established. The most utilised fintech products are mobile payments and domestic money transfers. In contrast, fintechs are weakly positioned in general insurance and business/property loans.

Consumers expect fintechs to keep growing their market share, largely by tackling financial exclusion rather than competing head-on with incumbent operators. By geography, they project the biggest fintech market share gains in South Africa, Nigeria and the Philippines. By product, they see fintechs being most likely to win share in general insurance and business/property loans.

Fintechs will gain share in emerging markets by tackling financial inclusion

Currently, our survey results indicate that traditional financial institutions have two-fifths of the financial services market, while fintechs capture around one-third. Informal channels have an 11% share, while 15% of our respondents are financially excluded. Over the next three years, these numbers are expected to remain constant for traditional and informal service providers. But fintechs would gain 6% points of market share by boosting financial inclusion.

Note that our survey does not weight responses by volume of business; accordingly, we think it substantially understates the market share (by volume) of traditional financial institutions. Nevertheless, we think the survey results do allow us to make meaningful relative comparisons, both across markets and products and over time.

EM consumer financial services market share split

Fintechs are most meaningful in Indonesia and India

Traditional financial institutions have the highest market share in South Africa (57%) and Saudi Arabia (49%). Fintechs have the largest presence in Indonesia (39%) and India (37%). Some of the prominent players in these markets include GoTo and FinAccel in Indonesia, and Paytm and PolicyBazaar in India. Informal channels are most prevalent in Egypt, while financial exclusion is highest in the Philippines.

Current financial services market share

Consumers use fintechs most for mobile payments and domestic money transfers

By product, traditional financial institutions are utilised most for credit/debit card payments and savings/fixed accounts. Fintechs anchor mobile payments and also generate notable market share in domestic money transfers. Informal providers are mostly used for current accounts. Financial exclusion is most prevalent for business/property loans.

Current financial services market share

In subsequent reports, we will dig more deeply into some of the key findings from our survey to shed more light on the current structure of emerging market retail financial services and how consumers expect this to change.

Related reading

Banks versus fintechs: The consumers’ perspective (Rohit Kumar, May 2022)