New fintech trends that are transforming the personal finance space

It is hardly surprising that in the last three years not much has been said about personal finance services in the media. The world has been completely distracted by other issues – especially those involving big tech, big pharma and big finance.

Digital transformation has had massive discussions in the context of banking and financial services. But the personal finance sector has undergone a transformation of its own.

Technology has created a new wave of customers: millennials and even younger customers are embracing a new era of finance, controlled via mobile technology and offering so much more in terms of products and services than ever before.

A time of change for the private economy

Anthony DiMarsico is the CEO of Banxe, an all-digital Belgian banking fintech that enables users to monitor the impact of their purchases on the planet. He points out that many more young people are now interested in investing – a place that was once reserved for the elderly and upper echelons of the banking industry. Part of this shift is due to the increased popularity of cryptocurrency.

He says: “A lot of people, especially younger people, have become more interested in investing, especially investing in the world of digital currencies. Investing – and DIY investing in particular – has become more prevalent since the first lockdown, possibly because it gave people more time to research and pursue what were once fleeting interests.”

But the current economic climate has also had an impact on customers’ attitudes towards their finances. “Inflation and the cost of living have continued to rise, reaching record levels, which in turn is leading people to seek additional income streams through digital currencies. In addition, there is a general distrust of the traditional banking system, mainly due to the outdated banking environment and inability to to offer fast and reliable payment options, says DiMarsico.

New trends in personal finance

Makala Green, founder and director of Green Wealth Planning says the demand to integrate services that enable consumers to “unlock” their financial potential and use both cash and crypto has led to massive disruption in the financial services market.

“We are seeing an increase in digital investment, such as cryptocurrency, with a large proportion of investors being Gen Z, which contradicts the traditional age demographics of investing,” she says.

“There has been a wave of businesses opting for contactless payments, which means we are now experiencing the biggest reduction in cash. However, this has also caused the need for additional cyber security; many companies need to offer end-to-end encryption to keeping consumers’ data safe.”

She also points out that digital transformation has helped the marketplace develop business models that provide better value for consumers while achieving gratifying profits. New trends such as virtual meetings via Zoom, Teams and Google Mees continue to hold their position as many people prefer the option of flexible working.

There is growing confidence in the use of technology as well. “People are more confident about using apps to organize and manage their finances and are less reliant on high street banks to meet their financial needs, resulting in a given rise to many budgeting and money management apps. We are also likely to see many more newcomers in the future due to consumer demand, says Green.

DiMarsico agrees with Green, pointing to the 17,000 cryptocurrency ATMs operating in America today. “There is clearly an appetite to use crypto in the same way that cash is there, be it to pay a bill, buy a meal or use public transport. The merging of cash and crypto is a trend that will transition into the future of payments, he says. “Using a single access platform that bridges old and new payments provides a variety of options and allows users to learn how to buy and trade with crypto.”

Political unrest has caused further disruption

“One of the most significant changes to occur in personal finance since the pandemic has been the accelerated digitization of risk and compliance functions,” said Stuart Esslemont, global head of legal and compliance at ZEDRA

He comments on the fact that the industry faces a highly unstable and rapidly evolving environment (regulatory, political, social and criminal). This forces companies to be much more agile and able to deal with threats, uncertainty, data requests and data analysis, often with challenging deadlines.

Esslemont goes on to say that the recent sanctions imposed on Russia are changing the landscape. “Regulators and other oversight bodies have come to expect businesses to be able to extract and deliver data to them within very challenging timeframes. Situations like these are time-critical; the potential consequences of inaction can be significant and further underline the need to invest in appropriate technologies,” says he.

As for a solution, Esslemont suggests that businesses strive to be more data-driven and try to avoid having to knit it together from multiple sources. “Implementing the right digital tools, linked to the core systems, will reduce the need for manual intervention and reduce the risk of manual errors.”