Since the turn of the century, innovation in technology has played a progressively substantial role in our daily lives. From Smartphones to home assistants to AI chat-bots, people are now relying on tech more than ever to simplify or improve productivity and quality of life! The COVID pandemic has only accelerated this trend, with increasing tech adoption across industries and sectors, making it more mainstream. This is also increasingly true for Banking and Finance. As such, 57% of consumers now prefer to use online banking tools to manage their finances, to compare, this figure sat at 49% pre-COVID 19, as per market research. The personal finance sector has certainly been no exception. Consumers have already become increasingly dependable on tech to research, invest, and manage their investments, even more so over the past six months. The rise of financial technology has modernized many processes for both service providers and consumers. To be more precise, Fintech has made the vast, complicated world of personal finances far more accessible to the average consumers.
The federalizing of money management from advisers and institutions to individuals have seen greater levels of financial literacy and the ability to customize one’s own money management. With the advent of digitization, these Personal Finance solutions are offered on smartphones. Thus, it is now possible to make informed financial decisions in real-time.
Although some banks have started to develop their own personal finance management software, many are turning to Fintech start-ups, Tech service providers, and smart device manufacturers for their offerings.
Below are some of the innovations on how Fintech is changing personal finances
1. Payments: Even though credit/ debit cards have been around for quite some time, the digitization of payments through the introduction of personalized finance apps, like mobile wallets, UPI’s and card-less barcode scanners, etc., intertwined smartly with a point of sale technologies, have made payments one of the most revolutionary of all Fintech offerings. An amalgamated and innovative ecosystem that is supple and offers solutions to consumers and merchants that are easy to use has universal suitability. The most appropriate payment mechanism and highly secure are becoming part of personal finance management.
2. Marketplace lending: Marketplace lending, commonly known as alternate lending, refers to the unconventional mode of data analytics for establishing the credibility of consumers for lending. The online lending platforms are not the axioms among the Fintech sector, drive intelligent data collection and analysis to facilitate informed and augmented decisions on the borrowers’ creditworthiness, thus cutting down drastically on time and cost while enhancing customer experience and agility in offering solutions.
3. Insurance technology: Technology in finance is driving the growth of the insurance segment by cutting down on risk, costs and time, and creating a robust, efficient and shorter insurance value chain. With the use of AI, Data analytics, and blockchain management for risk assessment, claims management and sales, the insurance sector is witnessing massive transformation, especially in areas of authenticating claims, claim settlement, background checks, KYC’s, faster onboarding, and improved consumer experience.
4. Wealth management: The rise of robo-advisors, along with the proliferation of AI tools, has transformed the way financial advisors interact and provide services to their clients. Wealth management is a significant forte once considered to be the privilege of the few intelligent bankers, is undergoing a makeover globally with a unique hybrid automation approach- a combination of robot advisory and human intellect-driven service.
Conventionally the personal finance sector has been known for its tough regulatory framework, scrupulous documentation, and lengthy, often cumbrous processes. With the advent of IT revolution, the Fintech segment offered an alternative to individuals and corporates alike, enhancing the consumer experience, simplifying processes, and making it a faster and efficient financial transaction format across platforms.
Author: Sumana Iyengar, CEO & Co-Founder Goavega Software India Pvt Ltd
Also Read: Key Fintech Trends to look out for in 2021
