The coronavirus pandemic has fast-tracked the call for more technical solutions. As the onset of the virus brought life as it was to a standstill, social distancing measures have driven consumers to utilise more digital services. John Ellmore, Director of KnowYourMoney.co.uk examines what it could mean for the personal finance industry.
Nowadays, we are living in an era of advanced technology, where we are becoming increasingly reliant on our devices to simplify the daily grind. Whether using a smartphone to organise meetings, or relying on home assistants to reel off shopping lists, we are looking to technological solutions more and more to ease the burden of mundane tasks.
And the personal finance sector has been no exception. Indeed, 57% of consumers now prefer to use online banking tools and interact digitally with their finances in the wake of the pandemic; to compare, less than half (49%) of consumers relied on such technology prior to the pandemic.
The growth of comparison websites
It’s safe to say that the personal finance sector has seen a great deal of change over the previous 20 years, thanks to the rise of financial technology (fintech). Put simply, the rise of fintech has made it easier than ever for consumers to research, compare, invest and manage their finances than ever before.
One of the most popular offerings for people looking to save money has been the emergence – and increasing popularity of – comparison websites. When it comes to considering options and searching the market for the best deals on everything from home insurance to energy suppliers, comparison websites are a failsafe route. Indeed, recent research from the Competition and Markets Authority has revealed that a staggering 85% of UK adults have used price comparison websites at some point in their lives when making financial decisions.
As comparison websites greatly reduce the amount of time consumers spend researching financial products, gathering the necessary data and displaying all the options in a clear, easy-to-digest format, they have remained popular over the years.
However, the technology used by such websites is in a constant state of change. Indeed, complex algorithms are now commonplace with these sites in order to collect more detailed information and consequently offer a more personalised service. For example, comparison websites can now help consumers find important information regarding an individual’s credit score or make snapshot assessments of financial risk; this in turn helps to better inform consumers of their most suitable financial options.
Simplifying finances with online banking
Possibly the most significant change for consumers in recent years has come in the form of digital banking. Even discounting the pandemic altogether, consumers have increasingly turned to online and mobile platforms to manage their accounts.
And given the ease of these applications, this is unsurprising. As both challenger and established high street banks alike utilise this technology, consumers can benefit from the streamlined services that these apps have to offer, such as real-time payments, which simplify the often-tiresome task of monitoring spending.
Digital banking tools can display these insights in easy to read charts, and also allow consumers to search for specific transactions without having to sift through reams of bank statements. Not only does this allow consumers to keep a careful eye on their spending habits, but this instant access to transactions also offers an additional level of security, making it easier to identify fraudulent activity.
It is likely that technology will continue to drive progress within the financial services sector, providing consumers with more and more choices when it comes to their financial management.
So, the question is: what next for fintech and financial services?
A tailor-made experience
When customers think of financial advisers, they might imagine having to take a trip to their local branch to discuss all of their options and receive a personalised service. But if technological advancements continue at their current pace, consumers can expect to obtain a made-to-measure service from digital chatbots without ever having to leave their house.
Although this technology already exists and consumers can already ask more general questions about their finances, it is still early days. But the future is automated, and when such technology is bolstered by AI, consumers will be able to ask specific questions and receive detailed answers about their personal situation, as if they were talking to a human adviser.
At the present time it is unclear when these new advances will come into play, but with so much disruption in the industry, it is becoming increasingly clear that personal finance sector is primed for further personalisation and consumer empowerment. Indeed, one in two consumers already expect a personalised experience when they receive financial guidance, in addition they expect not just a wide range of products which can be customised to their specific needs. And with such rapid developments in technology, such advancements are undoubtedly just on the horizon.
Long gone are the days where one-size-fits-all advice is the industry standard. With consumers becoming more empowered with easy access to a plethora of personalised financial options, the future certainly looks bright for the personal finance sector.