Jurg Widmer Probst on the changes Fintech are making to the global personal finance industry.
COVID-19 has sped up the urgent need for technical solutions to financial services. Consumers are now forced to bank, shop and conduct personal business online more than ever before. Social distancing and lockdown measures are still prevalent in many countries around the world. And as we head towards the end of a turbulent year, there is no let up in the drive towards a fully digitised future. How is this boom in Fintech affecting the personal finance industry?
Fintech is constantly changing the personal finance industry
We are now living in an era of constantly updating cutting-edge technology. Consider how much we are now reliant on smartphones and online services compared with even a decade ago.
And the pandemic has pushed this further into the mainstream. People who may have been resisting living their lives online have been forced to get to grips with fully online services. From the explosion in casual video calling to online banking and health services, technological solutions are now the answer to just about every day to day necessity.
Consumers are now looking for quick, easy and cheap ways to manage everything from their finances to their work life. And Fintech companies are stepping up to make sure this is happening. A recent survey shows that almost two-thirds of consumers actively prefer to use online banking apps, websites and tools.
In the wake of the initial stages of the pandemic, people are more accepting and open to the idea of technological solutions to personal finance. Pre-COVID, less than half of consumers chose to use online finance tools, but Fintech is now fundamentally changing the personal finance industry.
Opening up a whole new world of digital services for consumers
The rise of Fintech over the last 20 years has consistently, albeit slowly, opened the previously shut down world of personal finance directly to consumers. People can now look for their own idea of a good deal, financial service or loan. They can choose to step away from mainstream legacy banks and move to a disruptive newcomer. In short, personal finance will never be the same again.
An increasingly popular way for consumers to do their own personal finance research can be seen with comparison websites. Previously confusing options are presented in a way that shows quickly and easily what would work best for the individual.
And when it comes to researching good deals on everything from the best energy suppliers to the cheapest life insurance, 85% of UK adults now turn to comparison websites first. This statistic comes from research by the Competition and Markets Authority, and is the perfect example of how easy-to-use, freely accessible and clearly presented financial information is regarded by consumers.
Comparison sites reduce the time spent researching personal financial products and put decision making into the hands of consumers. These kinds of websites have been around for a while, but the underlying technology changes constantly. These sites now use extremely complex algorithms that offer increasingly personalised, targeted service to consumers.
Online banking offers more than ever before
Online banking is another major Fintech avenue that is now firmly entrenched into global society. It’s also the most profound and significant change for consumers when dealing with their personal finances.
Even pre-pandemic, billions of consumers around the world had already turned towards websites and apps to manage their personal finances. And once again, COVID-19 is pushing those who were holding off to do so as well. The most attractive element of these services for consumers is their ease of use.
Mobile banking apps and websites are super easy to navigate, well designed with the consumer in mind and offer access to more information than ever before. Crucially, they also put control of personal finances straight into the hands of the consumer.
Everyone with a smartphone and internet connection can benefit from endless streamlined personal finance services. Everything from real-time payments to setting up direct debits and standing orders can be done easily and quickly. There are also many apps freely available that help people to monitor and control their finances too, as well as those that give investment advice and much more.
The future of Fintech and personal finance
Technological advances combined with consumer acceptance will continue to push Fintech up the agenda within the personal finance sector. Increasingly personalised services will be on offer, along with decision making services that will allow consumers to apply for credit cards and gain a tailor-made financial service without leaving their home. The future for personal finances is fully automated and instantly available.
Much of these services exist in early forms already, and consumers are familiar and comfortable with accessing financial services online. The future will bring increasingly sophisticated automation in the form of AI chatbots that will be able to facilitate ever more complex services at the touch of a screen.