Digital transformation has had huge discussions in the context of banking and financial services. But the personal finance sector has undergone its own transformation.
Technology has created a new wave of customers: Millennials and even younger customers are embracing a new era of financing, controlled via mobile technology and offering far more in the way of products and services than ever before.
A time of change for personal finances
Anthony DiMarsico is the CEO of Banxe, a fully digital Belgian banking fintech that allows users to monitor the impact of their purchases on the planet. He points out that many more young people now have an interest in investing, a space that was once reserved for the older and higher levels of the banking sector. Part of this change is due to the increased popularity of cryptocurrency.
He says: “Many people, particularly young people, have become more interested in investing, particularly in the world of digital currencies. Investments – and especially DIY investments – have become more prevalent since the first lockdown, perhaps because they have granted people more time to research and pursue what were once fleeting interests ”.
But the current economic climate has also impacted customers’ attitudes towards their finances. “Inflation and the cost of living have continued to rise, reaching record highs, once again leading people to seek additional revenue streams through digital currencies. In addition, there is a general distrust of the traditional banking system. mainly due to the outdated banking environment and the inability to provide fast and reliable payment options, ”says DiMarsico.
New trends in the personal finance space
Makala Green, founder and director of Green Wealth Planning, says the demand to integrate services that allow consumers to “unlock” their financial potential and use both cash and cryptocurrencies has caused massive disruption in the financial services market.
“We are seeing an increase in digital investments, such as cryptocurrencies, with a huge percentage of Gen Z investors, which contradicts the traditional investment demographic age,” he says.
“There has been a wave of companies opting for contactless payments, which means we are now experiencing the largest cash reduction. However, this has also caused the need for additional cybersecurity; many companies have to provide end encryption. -to-end to protect consumer data “.
It also points out that digital transformation has helped the market to develop business models that offer better value to consumers and at the same time make satisfying profits. New trends like virtual meetings via Zoom, Teams, and Google Meets continue to hold their ground as many people prefer the flexible working option.
Confidence in the use of technology is also growing. “People are more confident in using apps to organize and manage their finances and are less dependent on top-tier banks to meet their financial needs, giving rise to many budgeting and money management apps. It is also likely that in the future we will see many more newcomers due to consumer demand, ”says Green.
DiMarsico agrees with Green and points to the 17,000 cryptocurrency ATMs in operation in America today. “There is a clear desire to use cryptocurrencies the same way there is cash, whether it’s paying a bill, buying a meal or using public transport. The merger of cash and cryptocurrencies is a trend that will go on to become the future of payments, “he says.” Using a single login platform that bridges the gap between old and new payments offers an assortment of possibilities and allows for users to learn how to buy and trade cryptocurrencies “.
The political turmoil caused further upheaval
“One of the most significant changes that have occurred in the personal finance space since the pandemic has been the accelerated digitization of risk and compliance functions,” says Stuart Esslemont, Global Head of Legal and Compliance at ZEDRA.
He comments on the fact that the industry is facing a very volatile and rapidly changing environment (regulatory, political, social and criminal). This is forcing companies to be much more agile and capable of dealing with threats, uncertainties, data requests and data analytics, often with challenging deadlines.
Esslemont goes on to say that the recent sanctions introduced against Russia are changing the landscape. “Regulators and other regulators expected companies to be able to extract and supply data to them in very difficult times. Situations like these are time-critical; the potential consequences of inaction can be significant and it further underlines the need to invest in appropriate technologies, “he says.
In terms of the solution, Esslemont suggests that companies strive to be more data-driven and try to avoid having to link them together from multiple sources. “Implementing the correct digital tools, connected to core systems, will reduce the need for manual intervention and decrease the risk of manual errors.”