Why 2022 is the year of booming private finances

One area of ​​financial services that rarely makes headlines is the personal finance sector, but new innovations, products and customer demand have transformed the place.

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 technology, big pharma and big finance.

Digital transformation has had massive discussions in connection with 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 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 bank fintech that enables 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 place that was once reserved for the elderly and upper classes in the banking industry. Part of this shift is due to the growing popularity of cryptocurrencies.

He says: “Many people, especially younger people, have become more interested in investing, especially investing in a world of digital currencies. Investments – and especially do-it-yourself investments – have become more widespread since the initial shutdown, possibly because it gave people more time to research and pursue what were once volatile interests. “

But the current economic climate has also had an impact on customers’ attitudes to their finances. “Inflation and the cost of living have continued to rise, reaching record levels, which in turn leads to people seeking additional income streams through digital currencies. In addition, there is general mistrust of the traditional banking system, mainly due to the outdated banking environment and inability to to offer fast and reliable payment options, says DiMarsico.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 CEO of Green Wealth Planning, says that the demand for integrated services that enable consumers to “unlock” their financial potential and use both cash and crypto has led to huge disruptions 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 demographic for investing,” she says.

“There has been a wave of companies 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 keep consumer data safe. ”

She also points out that digital transformation has helped the marketplace to develop business models that provide better value to consumers, while at the same time achieving pleasurable profits. New trends such as virtual meetings via Zoom, Teams and Google Meets continue to maintain their position as many prefer the opportunity for flexible work.

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

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

Political unrest has caused further disruption

“One of the most significant changes that has taken place 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 is facing a very volatile and rapidly evolving environment (regulatory, political, social and criminal). This forces companies to be much more agile and able to handle 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 supervisory bodies have expected companies to be able to extract and deliver data to them within very challenging time frames. Situations like these are time critical; the potential consequences of failure to act can be significant and further emphasize the need to invest in appropriate technologies, he says.

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

Digital trust in the personal finance industry

Like all other areas of fine service, the private finance sector has been thrown into digitization due to the pandemic. Resistance has affected full adoption, but, as Esslemont points out, “with new technologies and a shift away from the human touch, there is an element of trust and understanding of the technology that must occur before it is fully adopted.”

The costs of implementation, the lack of specialized talent, high demand for the new technologies, as well as collaboration with the right supplier in the digital ecosystem to implement the technology, are, he says, fundamental to success. “Companies that are regulated across multiple jurisdictions may face difficulties when mapping codes of conduct manuals, given possible divergent regulatory requirements.”

The future of personal finance

Given the massive changes that are taking place, it seems an impossible task to predict what the private economy will look like in a decade. However, there are certain changes that can be expected, says Green, who sees customer centrality as the defining element.

“Private finance customers demand more control over their financial future. Therefore, the future of personal finance and fintech is optimistic; it will provide more financial education and literacy, and be open to a much wider audience. Consumers can expect more simplicity and effective tools to “Help people take control of their finances. I think this will eventually force large financial companies to embrace change, otherwise they will be left behind.”

DiMarsico also believes that the growth of the digital foreign exchange market will drive significant changes, both for consumers and companies. He says the most likely scenario involves mainstream adoption globally. “Crypto will be so large that it will be inevitable and will become a part of our daily lives. So far, it has not reached mass adoption; however, platforms like Banxe are here to change that.”

He adds, “Crypto will not replace traditional banking, but the synergy between crypto and fiat will become common in well-developed countries.”