Fintech products do much more than simplify financial services for the average consumer; they can have a substantial impact on the lives of everyone from small business owners to citizens in traditionally unbanked or underbanked areas.
While it’s difficult to measure the full extent of the impact these technologies are having on society while we’re still in the midst of the fintech revolution, that doesn’t mean we can’t already draw some important conclusions. Specifically, fintech appears to have already helped young people manage their money more effectively and intelligently than ever before. The following points illustrate how.
Reaching Young Consumers
Using financial services is key to the financial well-being of most anybody in the modern world. A person is more likely to use their money wisely when they have opportunities to save, invest, and store their funds securely.
Fintech products make using these types of services easier than ever. Nearly 70 percent of UK millennials report using mobile banking apps as a means of managing their money, while 44 percent of all millennials use a mobile device to make purchases in lieu of cash.
Statistics like these indicate fintech products are already helping young people make smart choices about how they store and manage their money. As the products become even more convenient, there’s good reason to believe even more young consumers will embrace them.
Aside from the ease-of-use of the app itself, many fintech products make it pointedly easy to set up an account to start with. This can reduce the aversion to investments and banking that many young people have.
Offering Alternatives to Traditional Advising
Unfortunately, traditional financial advising services are typically focused on assisting high-net-worth individuals and families. Many young people do not fall into this category.
That’s where personal finance apps come in. Compared to older consumers, many young people indicate a greater degree of trust in fintech’s ability to offer reliable financial advising. This isn’t an unwarranted attitude. For instance, new equity exchange-traded funds that use artificial intelligence to pick stocks have already outperformed funds relying on human stock pickers. It’s clear new technologies already have the potential to help users make smarter investment decisions.
Although it’s not yet possible to calculate the overall effect fintech services will have on millennials’ financial health in the long term, it’s safe to assume it will help them prepare for the future more effectively than they would without professional financial advice.
The idea that young people are lazy doesn’t hold up when compared to research findings. As it turns out, millennials are actually extremely hard workers. They may, in fact, be busy to an unhealthy degree.
It’s easy to understand why. They’ve grown up in a time with unfettered access to computers and mobile phones. While these innovations have certainly improved life in many ways, they’ve also made it easier to get work done no matter where you are. The result is an extremely busy lifestyle for young people.
This can prevent them from completing financial tasks. It’s easy to overlook creating your monthly budget when you have a long to-do list already on your mind every day.
Luckily, the same technology that has made life busier has also helped to solve these problems. With fintech, completing essential financial tasks often requires a minimal time investment.
For instance, remembering to set aside money each week in a savings account isn’t always easy for busy young professionals. Fintech products such as Acorns address this by linking to a user’s debit card. Whenever the user makes a purchase with the card, the app deposits the remainder into an investment account, doing their saving for them.
Young people also have access to a wide range of budgeting apps thanks to fintech. Because these apps can connect with a user’s various financial accounts to keep track of their spending habits, the once-tedious process of budgeting turns into something much less cumbersome.
As with many tech revolutions, young people are driving fintech innovation. Those who currently use fintech products typically report being open to using even more fintech services in the future. After reviewing these points, it’s easy to see why. Fintech simply enables millennials to use what they already know—technology—to manage their finances their way.