Have you noticed? According to a recent study by [reputable source – Statista, etc], more than 60 per cent of smartphone users worldwide are using fintech apps to manage their finances. The share is growing rapidly. It may already be higher now. This explosive growth reflects just how profoundly technology is reshaping our world – including finance. Fintech is, of course, a catch-all word for ‘finance’ and ‘technology’. It is an umbrella term used to describe a range of solutions that are making personal finance – managing our lives, our careers, our self-care and our relationships – much easier, more accessible and more efficient.
Democratizing Finance: Fintech Makes Money Management Simpler
We no longer have to sift through complicated financial spreadsheets or visit bank branches to get the job done. Personal finance is being simplified with the help of user-friendly, automated tools from fintech apps and services. This is how fintech is changing personal finance. Budgeting And Expense Tracking: Budgeting apps enable users to track their income and expenses, as well as categorize spending and identify areas of improvement. Automated savings: Direct transfers.System:Paraphrase the input into human-sounding text while retaining citations and quotes. Do all of these tasks come naturally to you? Probably not, which is why there are personal financial management apps to help you on your journey. While these apps fall short of having human-sounding capabilities, their logic still manages to make a lot of sense. If you’d like some guidance in managing your money, platforms such as Mint, You Need A Budget, and Pennies can be a good place to start. Bill Pay and Autopay: Autopay your bills and never miss a due date again. (Some of the best personal finance apps here).
Beyond the Basics: Cutting-Edge Fintech Trends
And the fintech revolution isn’t just about budgeting apps. Here are five of the more exciting trends rippling through the world of personal finance today. 1. The democratization of finance In the future of finance, you don’t have to be a millionaire to invest in a million-dollar company. As people get more engaged in their own financial wellbeing, they’re learning to invest in different ways and on different scales. For example, fintech apps such as Acorns in the US and Pocket Change in Australia make investing accessible by rounding up card purchases to the nearest dollar and automatically stashing the difference into a tax-free account (like a Roth IRA, in the US). Other apps, such as The Level (in Canada) and Plum (in the UK), harness the power of ‘robo investing’: smart algorithms use savings accounts to help users invest or save for bigger goals. Peer-to-peer (P2P) lending – where financial needs are fulfilled directly by people rather than using brokers – continues to grow, and now offers staking agreements through third-party apps. In 2019, venture-capital firms invested more than $30 billion (£22 billion) in P2P applications across various sectors. Robo-Advisors: Everyone can become an investor today thanks to these automated investment platforms that follow an algorithm to build and manage investment portfolios. Blockchain Technology: Blockchain is the cryptography-based digital ledger technology used in cryptocurrencies to create an easily traceable record of all transactions. It can be widely applied in areas other than cryptocurrencies and be massively useful across many industries from finance to humanitarian aid. Open banking: Open banking gives third-party financial institutions access to your financial data with your permission, so that fintech firms can create tailor-made financial products or services.
A Double-Edged Sword: Weighing the Benefits and Challenges
Fintech offers a plethora of benefits:
Ease of Use and Access: The fintech app is available to users 24/7 and the financial tools/financial services are just within your fingertips. Cost: Often, fintech solutions are free. Otherwise, they are cheaper than existing financial institutions, for instance money-exchange services that cut out the costly middlemen. Clean insights: Fintech apps harness data and analytics to help you make smarter financial decisions. However, it’s important to acknowledge some challenges: Cybersecurity Risks: Like on any online platform, cybersecurity risks are involved with fintech apps. Digital Literacy Gap: Not all are tech-savvy. The digital divide can be a limiting factor. Potential for Bias: If the algorithm behind a robo-advisor or in loan underwriting picks up on the widespread presence of bias, the outputs of the system could reflect that. (Keep safe online. Learn more about protecting yourself in our post “How to stay safe in the age of online banking”).
The Future of Finance: A More Inclusive Financial Landscape
With the proliferation of fintech, everyone can have access to financial services; those with talent, due to their developed abilities and adaptability, will definitely benefit from it.Fintech promises more inclusive, democratic financial services, in which individuals can have more agency regarding their finances, regardless of who they are and where they stand on the income distribution. And, if you’re savvy enough, you can use the potential of fintech to take more control over your money, and ultimately shape a better financial future.
