What’s Next for Personal Finance Technology?
The future of finance can be hard to predict. Maybe someday we start using gold for currency, or perhaps we will go back to trading goods and services. These ideas aren’t that far fetched, considering now we are basically just transferring a number from your column to another person’s personal column.
Or, maybe bankers will become robots and we will all just become mindless consumer zombies — also not that hard to imagine. While these things are probably not right around the corner, you’d be surprised at how close the similarities are. Technology is changing virtually everything about our world, and personal finance technology is growing every year. Alternative payment options, progressing chatbots, accessible investing tools, payment changes, and targeted advertising are all in the works for personal finance technology.
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No More Money
Checks are a thing of the past, and even cash is becoming non-essential in everyday payment situations. Basically every transaction is now done with a credit card or a debit card. However, alternative payments are becoming more popular. Instead of scanning your card, you’re scanning your phone on an app that houses your financial information. Things like Apple Pay or the Google Wallet are allowing consumers to buy without their physical card on hand. The modern wallet is now basically just a phone with a few financial and banking apps on it. There will be new security risks, but also new security fixes associated with this change. Soon, currency will no longer be prevalent, and our currency exchange really will be moving a number from one column to another.
Not only is our actual money being transferred from paper records to data in the ether of our mobile devices, there will also be a surge in technology for alternative currency. Bitcoin is a form of digital currency that isn’t exactly new, but will become more popular as the years go by.
Additionally, blockchain technology (used as the database for bitcoin) will become more popular as well — and not just for bitcoin. Since so much of our financial data will be online, a database like blockchain is essential because it’s an incorruptible data ledger of economic transactions that belongs to no one in particular. It’s not hugely popular now, but it’s definitely technology for the future.
How these tech advances will affect real people will include things bigger than just the absence of a wallet. There may be issues with spending that can be detrimental to credit health when you have no physical representation of using your credit card or debit card for expenses. Since personal finance technology is meant to make our finances more legible, this would be a backward step in progress. However, there may be fixes for these problems including automatic spending controllers to aid in budgeting and overspending.
Customer Service Technology
Automated tellers and chatbots are nothing new, but customer service technology will follow this trend exponentially. Today, you will probably talk to an automated voice before you talk to a person if you’re calling a financial institution. It will direct your call, and then you’ll probably get another automation, but you’re more likely to talk to an actual banker if your question or problem is complex enough.
The future of personal finance customer service will be an entirely automated customer service experience that can tell you a whole lot more than just your savings account balance. Even for the technophobe, this technology will aim to offer comprehensive help that’s easy to communicate with. Artificial intelligence capable of understanding each individual customer’s financial situation is a real possibility for the future of personal banking and the trends are moving in that direction.
Fixing customer service issues with technology is beneficial to companies by implementing an efficient technology, and beneficial for customers that need help handling whichever issue they have with their finances or question they have about loans and credit. Knowing how large of a mortgage you can afford, or how much debt is too much debt for you are questions actual people will be able to find out in a completely technological way.
Broad Investing Knowledge
Understanding your own finances, knowing how to help your savings grow, and being knowledgeable about the financial markets around you used to be something that you’d have to find a banker or accountant to figure out. Investing with your finances is a confusing and tricky topic that many aren’t confident enough with to begin dabbling in.
However, the future of personal finance technology will involve e-tools to help an everyday person understand how to invest their money. Homeownership, buying a car, investing in retirement, or investing in real estate are all aspects of investing that will be more attainable in the future. Not only will complex investing tools be more attainable, but there will be technology to help you make investing decisions based on each person’s individual finances. With all of these tools, each person will have a more broad knowledge on how to invest their money.
Understanding an S&P index, knowing how to handle a short-term investment, or calculating the risk of a junk bond are all answers many of us seek financial advisors to answer because insider investment knowledge is just not financial common knowledge among many people. As more people learn about this area of the financial world, experts may disappear, but it may put more people at risk of hurting their credit with poor investment opportunities or damage their retirement savings.
Where Money Comes from, and Where it Goes
Personal finance technology isn’t just about us and how our financial lives will be shaped as a result, it’s also about how we make our money and where it goes. This is a big topic, but basically every aspect of making money and spending it will be profoundly affected by technology.
The surge in online shopping has already become a huge change in how consumers purchase things, and that trend isn’t going anywhere. Not only that, but why we buy the things we buy is different. Advertising has been around a long time, but not the technological advertising we have now. Targeted advertising will only become more advanced as technology grows — so consumer zombies are definitely not unrealistic. With more shopping options comes poor spending habits for some, so consumers are tasked with budgeting better to understand where their money is going.
How we make our money is changing as well, with technology making everyone a small business owner–whether it’s renting their home or selling used goods. Tech jobs will continue to grow, as will side-hustle mobile jobs. We will get paid with online payment systems, manage our accounts with online banking, and spend it through alternative payment systems based on targeted advertising.
Technology will change virtually every step of our paycheck’s life from when it’s attained to when it’s spent. With small business comes small business taxes, so understanding which income is taxable income and how to file that paperwork in April is as important. Also, consumer trends may change as a result of everyone becoming a retailer in one way or another. Understanding cash flow, opportunity cost, and inventory may change our buying habits and where we shop in general. Change in these areas tends to affect everything around it.
The future of personal finance technology can only be assumed since we don’t actually know what the future holds. However, the odds following financial trends can make a pretty good guess at how things will go. A clear picture of how technology will affect our personal finances isn’t crystal clear, but it’s sure that it will be affected by technology in one way or another. The disappearance of credit cards, artificial intelligence, more abilities to invest, and the tech influence on the lifespan of our money will all be aspects that technology will change in personal finance at some point in the future — we just don’t know when.
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Chelsy is a writer from Montana who now lives in Boise, Idaho. She graduated with her journalism degree from the University of Montana in 2012. She enjoys talk radio, cold coffee, and playing Frisbee with her dog, Titan. Follow Chelsy on Twitter @Chelsy5
This post was updated February 28, 2019. It was originally published July 27, 2017.