Strategy Note /

The emerging markets where fintechs are most likely to gain market share

  • Fintech market share gains will be driven by better financial inclusion, notably in Philippines, Nigeria, South Africa

  • Incumbents will lose most share in South Africa and Vietnam. Informal channels will be squeezed most in Pakistan

  • Our survey suggests head-on conflict between fintechs and traditional financial institutions is still several years away

The emerging markets where fintechs are most likely to gain market share
Rahul Shah
Rahul Shah

Head of Corporate & Thematic Research

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

Our detailed survey of 900 individuals across 14 emerging markets provides a unique, demand-side perspective of how consumers expect their financial services needs to evolve over the coming three years.

Below, we consider key forecast differences by market. Subsequent reports will look at differences in expectations by financial product and will consider how the pandemic has affected the consumer outlook.

Fintechs are expected to win market share by boosting financial inclusion

Our survey asked consumers to consider how they expected their own usage of 11 financial products would change over the next three years. The results indicate that fintechs will generate market share gains by tackling the problem of financial exclusion. Meanwhile, consumers expect their usage of traditional financial institutions and informal channels to be largely unchanged, on average.

The chart below also allows the results to be examined at the individual country level.

Expected 3-year market share change by provider type

The biggest changes in industry structure can be expected in South Africa, Nigeria and the Philippines

By country, consumers expect the biggest fintech market share gains in South Africa (13% point increase), followed by Nigeria (9%) and the Philippines (9%).

South African fintechs are likely to benefit in two ways; improved financial inclusion and gains from traditional financial institutions. Meanwhile, for fintechs in Nigeria and the Philippines, gains would come principally from these entities servicing the large financially-excluded populations in these markets.

Note that the Philippines is ranked second, after Vietnam, in our fintech attractiveness scorecard, reflecting its large unbanked population but also its good access to technology.

In this context, it is somewhat surprising that India, which has the world’s second-largest financially excluded population (after China) is not expected to see much change in fintech market share or improvement in financial exclusion. One reason may be Indian fintechs’ high existing market share among our respondents.

Expected 3-year change in market share

Incumbent firms and informal channels are unlikely to experience major market share shifts

For traditional financial institutions, consumers in six of our surveyed 14 emerging markets expect this sector to experience positive market share changes, with the largest gain expected in the Philippines. As we will see in our next report, consumers feel incumbents have room to grow in certain product areas, such as savings and investments, general insurance and international remittances. Meanwhile, incumbent firms are likely to lose share in South Africa and Vietnam, largely to fintechs,

Looking at informal channels, overall consumers expect little change in their presence, with their market share across EM expected to remain flat at 11%. At the country level, Pakistan is likely to be the biggest loser, while informal channels could experience a small uptick in Vietnam.

Expected 3-year change in market share