Nearly nine in 10 Americans now use some kind of fintech app to manage their financial lives, according to new report documenting the increasing digitization of financial services.
Fueled partly by the coronavirus pandemic—which accelerated consumers’ use of fintech for banking, payments, and investing—fintech has now “reached mass adoption,” according to the annual report by fintech startup Plaid. The percentage of U.S. consumers using fintech swelled to 88% in 2021, compared with only 58% in the 2020 edition of the survey, Plaid said. That means that more Americans now use fintech than they do video-streaming subscriptions (78%) and social media (72%), according to the report.
“The Internet has not really come for financial services before, and now it has,” John Pitts, Plaid’s global head of policy, told Fortune. Pitts said the “astonishing” year-on-year increase in consumer use “means that fintech is now one of the most adopted technologies by U.S. consumers.”
While fintech adoption remains most prevalent among younger generations (95% of millennials reported that they use fintech), growing adoption among older demographics have helped drive the overall growth of financial technology applications. The Plaid report found that baby boomers were by far the fastest-growing segment of fintech consumers—with fintech use among those age 56 and older doubling year on year, to 79%.
As far as why consumers have increasingly flocked to fintech apps, 93% reported that it saved them time, while 81% said it gave them more control over their finances, and 78% said it saved them money. In turn, the survey found growing expectations among consumers that financial institutions will offer them digital features and services. Eighty percent of respondents said it’s important that they’re able to connect their bank account to the digital apps and services of their choosing; 76% said that connectivity was a “top priority” in choosing a bank; and 69% said they would consider switching banks if their financial institution couldn’t connect them to a fintech app.
Though fintech use has grown considerably, the survey found that there remains ample room for further proliferation—with no single fintech use case exceeding more than 70% “penetration” among U.S. users, it said. Digital banking and bill payments were the most prevalent uses of fintech (67% of respondents reported using digital fintech apps for either task), while savings and investing apps were among the fastest-growing fintech use cases.
“While the concept of managing your finances digitally has reached mass adoption, none of the individual types of tools has gotten more than 70% adoption,” Pitts said. “For individual types of products and services, there’s still a huge amount of product-level growth left in the market.”
That room for growth bodes well for Plaid and the more than 5,000 fintech apps that rely on the San Francisco-based startup’s “open banking” platform. With its technology enabling fintech services to more easily connect with users’ bank accounts, Plaid has played an influential role in the overall expansion of the fintech sector in recent years. After an acquisition attempt by Visa fell through following scrutiny from federal antitrust regulators, Plaid raised $425 million in a Series D funding round in April that valued the company at $13.4 billion.