Inflation, economic uncertainty, and a generalized sense of instability are not holding back the world’s digital transformation, which clicked up meaningfully in the first quarter of 2023.
A landmark research project, the PYMNTS ConnectedEconomy™ Index (CE Index), which for the past few years has measured the growth in digital across various activities grouped into “pillars” such as “Live” for home-related engagement, “Move” for travel and “Be Well” for health — 37 activities across 10 pillars are tracked in total — recorded digital growth defying the dim economics of 2022 and early 2023 with more people engaging digitally and daily.
As is often the case, there were standouts in the Q1 study How the World Does Digital: Daily Digital Engagement Hits New Heights, with digital transformation crossing boundaries, from age groups to nations. France and the U.S. led in digital engagement gains, increasing 10% and 9.2%, respectively, putting U.S. engagement hot on the heels of Index leader Singapore.
Credit and debit cards held their lead as the payment method of choice across the 11 world economies comprising the CE Index, but the growth in digital wallet usage is revealing when it comes to how consumers are shifting more towards digital tools in everyday buying routines.
The use of digital wallets surged across all economies and wallet brands. But as the Q1 2023 study states, “Apple Pay drove most of the gains, increasing its overall in-store use to 3.6% from 2.5% a year ago and from 3.4% to 4.5% for online purchases. Consumers in Australia are the most enthusiastic adopters of Apple Pay, at 12% for both in-store and online use, while those in the Netherlands, Singapore, and Brazil recorded the largest year-over-year growth in the use of Apple’s wallet for online purchases. Overall, Apple Pay saw increases in nine of the 11 countries for both in-person and digital transactions.”
Digital wallets edged out cash for in-store transactions for the first time in one of the countries we study, “accounting for 21.9% of all physical purchases in the U.K. versus 19% for cash.”
Turning to network effects created as 622 million consumers worldwide engaged daily in at least one of the 37 activities monitored by the CE Index, the new study notes that “digital engagement in one activity boosts participation in others, particularly those with similar digital characteristics. These positive network effects climbed 4.4% between Q1 2022 and Q1 2023, with digital travel and shopping activities as the biggest cornerstones of this increased digital engagement.”
Digital transformation moved higher as consumers around the world ramped up daily digital engagement by 6.5% over the preceding 12 months, with activities like travel (part of the ‘Move’ pillar) rising 9.7%, providing the biggest single push behind the CE Index increase.
Per the study, “Two specific activities stand out most: purchasing online airfare, with engagement up 14%, and seeking online travel information, up 11%. Consumers in the U.S., Spain, and France disproportionately shouldered this growth, with double-digit gains ranging from 15% to 19%.”
Looking at age and income-based breakdowns of connected economy engagement, older consumers are closing the digital engagement gap with younger users — a trend that’s grown steadily since the pandemic digital shift moved into high gear in 2020 — and the Q1 2023 report shows bigger advances for those not traditionally seen as digital-savvy.
“Baby boomers and seniors stole the spotlight over other age groups, registering an average 3.6% rise in digital engagement over Q1 2022, followed by Gen X with a 2.3% increase. Younger age groups also upped their digital engagement, but at lower rates: Generation Z and bridge millennials experienced moderate growth of 1.6% and 1.3%, respectively, while millennials lagged further behind,” per the study.
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