Mary Meeker Internet Trends Report 2019: The Unstoppable Rise of Fintech

Mary Meeker has released her latest Internet Trends Report for 2019. For the uninitiated, Mary Meeker has been referred to as ‘the voice of the Internet’ and the Internet Trends Report is arguably the most eagerly awaited slide deck of the year in Silicon Valley and throughout the entire technology ecosystem. This years report, as always, covers a wide variety of topics – from global Internet usage and E-commerce to fintech and healthcare. This year’s slide deck was bigger than last year’s, clocking in at 333 slides in total (up from 280 in the 2018 report).

The report follows on from last year’s release, with some consistent themes emerging in terms of slower Internet usage growth and decelerated mobile device shipments. The report also highlights some elements that might be deemed as obvious (consumers are spending too much time looking at mobile devices) and some elements that are far more insightful (some computer games demonstrate the characteristics of social media platforms rather than traditional games – Fortnite for example). As ever, we’ve taken the time to crunch through the key facts and present them as bite-sized chunks, to save you the effort of trawling through the entire document. Today we’re exploring the key takeaways from the Mary Meeker Internet Trends Report 2019.

New Growth Is Hard To Find

This has been a consistent theme in the Mary Meeker reports for the past several years. The report indicates that for the first time ever, more than 50% of the world’s population is connected to the Internet. In 2017 there were an estimated 3.7 billion (49% of the world’s population) people connected to the web, with this number rising to 3.8 billion (51%) now connected to the Internet in 2019. This represents a 6% increase in users in the year to date, down from 7% in the previous period. There is an assumption within these numbers that the developed world is well catered for when it comes to Internet connectivity due to established broadband infrastructure and hardware accessibility. The remaining 49% of the world population who are still not connected to the web are constrained in terms of accessibility to appropriate hardware and infrastructure.

Global Internet User Growth Graph

Global Internet User Growth Graph

The bad news here is that the next 49% of Internet-enabled users will be tougher to onboard than the first 51%. It should come as no surprise that mobile represents the most efficient and fastest way to provide a ‘first touch point’ for new web users and this presents seismic opportunities, particularly in the Far East in terms of growth and the expansion of the number of activated Internet users. For example, the Asia Pacific region possesses significant potential in terms of future growth, with 53% of all Internet users globally and only 48% penetration.

It’s All About The Data

It’s no secret that when it comes to developing great software that customers love, that data is everything. How we harness and collect data is equally as important as how data is interpreted and leveraged to make meaningful and savvy business decisions. The Internet Trends report is all about data, analysing trends relative to your business sector and how you can take these ideas, elaborate on them, make them better and infuse them into your own thinking in order to strive towards your goals as a company. Mary Meeker has suggested: “If it feels like we’re all drinking from a data firehose, it’s because we are”. This creates significant challenges and opportunities for businesses, in that awareness around these factors stimulate meaningful discussion and evolution.

The fastest growing and most successful companies in the world have become highly adept in gathering and analysing vast amounts of data. Increasingly context-rich data enables the business to steer products and services towards hyper-personalisation. High levels of personalisation can be obtained at lower prices and delivered more efficiently, in turn, this can deliver increased levels of customer satisfaction.

In previous decades, oil has been referred to as the most valuable commodity in the world, now it’s data, and this has profound ramifications for business owners, especially when it comes to developing software. To illustrate the sheer scale of data we’re now dealing with, the Internet Trends Report produced a graph predicting that by the year 2025 there will be nearly 200 zettabytes of original and replicated data. In case you’re wondering, one zettabyte is the equivalent of one billion terabytes and one terabyte is the equivalent of 1,024 gigabytes. That’s a serious amount of data! See below:

Data Volume growth graph

Data Volume Growth Graph

“Traditional paradigms will be redefined (like vehicle or white goods ownership)& ethical, moral & societal norms will be challenged”

David Reinsel / John Gantz / John Rydning – IDC, The Digitization of the World

The future of the data-driven world is one where we are all constantly connected. New IoT based innovations that leverage sensors to gather data will mean that data is always being tracked and monitored. Voice assistants will take care of the listening, whilst an enormous surge in the number of smart cameras, driven to a large extent by advancements in new mobile hardware, will act as the ‘eyes’ of an increasingly connected, data-driven world. Perceived randomness will no longer be a ‘thing’ – as sophisticated algorithms take seemingly meaningless patterns and translate them into meaningful insight. Businesses will increasingly seek to understand the capabilities of artificial intelligence, to deliver highly targeted, hyper-personalised user experiences, to open new markets and to increase the productivity of employees and existing business processes.

Internet Trends: New Fintech Products Are Scaling Rapidly

Fintech platforms such as Revolut, Nubank, Monzo and Starling are experiencing exponential growth and this is a consistent theme throughout the latest report. It’s now estimated that Nubank, as an example, has more than 9 million activated users, which means the user base has more than doubled in less than a year. Nubank provides a completely digital banking offering in Brazil. The service provides a wide range of services for Brazilian banking customers such as debit cards, personalised reward programs, peer-to-peer money transfer, savings accounts and debit cards.

Nubank Brazil Digital Banking

Nubank Brazil Digital Banking

Revolut is another example of a fintech product experiencing rapid growth and ability to scale, having reached more than 4 million users in just under ten months.

“Personalisation with the help of data/technology will allow people to have all their financial needs covered and what’s more – they will be able to choose all those settings themselves. We’re also heavily investing in data science and engineering to automate, accelerate and increase the quality of these decisions”

Nikolay Storonsky, Co-Founder & CEO, Revolut

Revolut Europe Personalised Banking Data Mobile Graph

Revolut Europe Personalised Banking

Both Revolut and Nubank are fantastic examples of fintech platforms that are scaling at an astonishing rate, driven by new and exciting advancements in mobile technology and shifting consumer behaviour patterns. One of the key themes of the 2019 report was the fact that what we’re currently witnessing with scale-ups such as Revolut and Nubank, is only just the start of a much wider theme within new financial technologies and banking services. New business models will present unique opportunities and fresh channels for delivering financial services and new banking products.

New fintech products and services, particularly in emerging markets and territories are starting to become major players. The report closely examines the incredible rise of companies such as Ant (an Alibaba payment affiliate) and Mercado Libre in terms of revenue growth. Mercado Libre has displayed astonishing growth in terms of revenue, with the number of transactions more than doubling in a two-year time frame to over 400 million.

MercadoLibre Latin America Digital Payments

MercadoLibre Latin America Digital Payments

Another fantastic example of innovation and rapid growth via new and emerging fintech channels is the South Korean company Toss. One of the biggest financial services related challenges for South Korean consumers is the availability (or lack of) mid-level interest-rate loans. One of the key adoption barriers in this example has been the lack of robust credit profiling and evaluation mechanisms to approve this type of lending for consumers and small to medium-sized business owners. Toss manages to solve this problem by leveraging data from its mobile payment platform and external third-party data providers to make highly optimised decisions relating to the credit suitability of individuals and business owners. The platform has successfully doubled in size in less than a year and is now catering for 12 million monthly active users.

Fintech & The Unstoppable Rise Of The Super App

Super Apps are defined as mobile applications that tie together numerous different services. One of the best examples of a modern day Super App is the Chinese offering WeChat. WeChat provides a broad range of services for consumers from messaging and games to peer-to-peer payments and mobile commerce. Increasingly, these apps are providing a ‘one stop shop’ to cater for a variety of consumer needs and requirements. One of the major fintech themes in Mary Meeker’s report is the fact that Super Apps are continuing to scale at an astonishing pace, particularly in the Far East.

It’s estimated that in SouthEast Asia, less than 27% of adults have bank accounts. This is a huge challenge to overcome because not having a bank account means that customers are effectively invisible to traditional financial companies and institutions. It also means that it’s virtually impossible for unbanked consumers to gain access to vital financial services such as personal loans, mortgages and financing for small to medium-sized business owners. One company who are attempting to solve these challenges is Grab.

Grab is a service very similar to Uber and popular in the Far East. Traditionally a ride-sharing platform, Grab is a Super App that is now augmenting its ride-sharing offering with services that would traditionally be delivered by financial services companies. GrabPay is a new service offering that sits on top of its existing ride-sharing platform and provides their user base with access to a variety of different financial services and products that are not available via traditional financial lenders and institutions. Having rolled out GrabPay, Grab has successfully quadrupled the value of its average user transaction. Mary Meeker is suggesting that Super Apps such as Grab and Uber will continue to bake-in financial products and services into existing app offerings that are not necessarily related to banking or financial services in the first instance.

Grab Southeast Asia Digital Payments

Grab Southeast Asia Digital Payments

It’s unclear exactly how emerging Super Apps will evolve across different territories throughout the world. But these new channels are enabling fintech products and services to reach mass-market at a much lower cost in terms of advertising to acquire new users. For the likes of Uber and Grab, these fintech services are adjacent to the core product offering but act as the perfect platform to market to an existing, highly qualified and actively engaged user base, without the eye-watering costs associated with marketing to acquire a new audience from scratch. This is not to suggest that apps such as Uber and Grab can solve the unbanked challenge, but providing financial services via these new and emerging channels is certainly a step in the right direction.

Fintech Future Is Freemium & Hyper-Personalised

The Internet Trends Report 2019 also delves into the world of freemium business models and hyper-personalisation in fintech. The report details how freemium subscription models have been successfully adopted across other industry verticals and are now making their way onto the scene in fintech. Freemium business models offer a non-committal, low risk, low-cost means of onboarding new users. They tend to operate by giving users a glimpse of what they can expect in a full product by sharing a limited number of product features for free to give the user a sense of what they’re buying into. The trick with freemium is that the core features will be gated by a paid-for tier which is only available when the user pays the relevant monthly subscription fee. This is a model that has worked incredibly well for start-ups in other industries, particularly for the likes of Spotify and Angry Birds. This is a model that has been utilised in the games industry, particularly with mobile games, for a number of years now. It’s only now that the freemium model is starting to find its feet in the highly lucrative and rapidly growing domain of fintech.

Personalisation is another technology trend that provides huge opportunities for fintech companies in terms of enhancing the quality of the customer experience of a particular product or service. When deployed correctly, personalisation techniques provide fintech companies with the ability to customise certain features based on the unique financial characteristics of the individual. The theme of personalisation in fintech is something we explored recently in ‘why consumers need innovation from their banks’ and ‘How Artificial Intelligence Is Impacting Banking’. The reality is that today’s modern banking consumer needs and wants a high degree of personalisation from banking related services. Personalisation in fintech is no longer a ‘would like’ and has evolved to become a critical aspect of any new or existing fintech service or product.

The Internet Trends Report indicates that 90% of consumers now prefer brands that deliver personalised offers and that over 80% are prepared to passively share personalised data in order for brands to deliver a personalised CX (customer experience). In addition, it’s estimated that 70% of consumers would be prepared to actively share their data for the same purpose.

Conclusion

To summarise, for businesses, especially if your business involves software, the annual Internet Trends Report is a fantastic way to keep on top of the latest emerging trends across the entire technology ecosystem. Whilst some of the themes contained in this years report follow on in a similar fashion to previous years, there have been some new and interesting themes highlighted via this years report, particularly in fintech. Internet usage growth continues to plateau, with more than half of the world population now being connected to the web. The challenge now will be connecting the remaining 49% and this will be a trickier proposition that connecting the first 51%. The same can be said for mobile device shipments in terms of reduced levels of growth year-on-year, again this has also a continuing theme over the past few years. The report also highlights the vast quantities of data now available to businesses and underlines the importance of harnessing data insight to enhance business decision making. Finally, the world of fintech is undergoing rapid transformation thanks to exciting new technologies and shifting consumer behaviour patterns. Freemium business models and personalisation are also recurring themes within fintech throughout this year’s report. If you’re interested in learning more about the Internet Trends Report, or have a project you’d like to discuss, we’d be delighted to start the conversation. You can contact us right here for more information.


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