How fintech apps help consumers weather economic challenges, in 4 charts

Fintech adoption skyrocketed in 2020 due to Covid-19 restrictions. Forced to stay home, consumers flocked to finance apps to take care of their banking needs. But, as the lockdown restrictions loosen, are consumers still sticking with fintechs?

Plaid's Fintech Effect 2022 report shows a slight dip in adoption, owing to Baby Boomers returning to banking in person. But, the younger generation is sticking it out 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 grew by 38% in the last three years. Fintech apps are becoming an essential tool in managing personal finance, having supported consumers through three years of global economic challenges.

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

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

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

• Covid-19 accelerated digital adoption, and the trend continued into 2022, with eight in ten consumers using some digital financial tool. The figure is slightly 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 in 2021, reopening the economy in the US and UK raised questions about whether digital acceleration would stick. The rising trend in 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 are leaning on fintech during economic challenges

• Budgeting and savings 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 their budget remained a primary financial concern for more than a third of consumers, rising year-over-year from 31% to 36%.

• But overall adoption 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 a vital role in helping consumers achieve financial well-being. 

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

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

• Around six in ten consumers saved time 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 literacy. 48% say that fintech has helped them to understand their finances better and gain more confidence.

For consumers, managing their finances is a huge concern. Discovering tools to manage money has empowered them to save time and money. Some have even reduced stress and recovered from financial mistakes. 

4. Fintech use cases are on the rise and improving the financial wellness of consumers

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

• The decrease 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 usage, showing a significant opportunity for fintech to step into a growing population of earners. 

Fintech is bringing more people into banking, budgeting, planning, and investing services that can help improve financial wellness.