DIGITAL DISRUPTION IN FINANCE
In an ‘I want it now’ culture, thinking for the future isn’t always easy; two-thirds of Boomers are unable to maintain their lifestyles once retired, and 60% of Gen Yers with credit cards aren’t paying off their balance each month. In fact, 72% of Brits say they’d curb their spending due to money worries. But saving can be difficult, and a growing number of people are enlisting digital finance tools to help them plan for tomorrow.
AI money management tool Cleo tells spenders how they’re draining their money, and Digit – a bot tracking users’ income and spending – automatically puts aside money to help meet financial goals. Meanwhile, budgeting app Squirrel asks customers to enter their income, bank details and deposit goals in order to help them save for their bucket list.
Between contactless cards and tap-and-go mobile payments, people have grown accustomed to seamless spending – even a mortgage can be applied for via mobile. So it makes sense that people are starting to think about seamless saving as well. As Gen Zers move into adulthood and Yers begin to think about buying houses or starting families, understanding how to save for the future and become financially independent in the most efficient way possible is important. These smart tools can bypass human biases and impulses, helping people put money away for the future.
It's not surprising that digital alternatives are becoming even more popular with consumers. These disruptors are offering more than reduced fees, mobile services and convenience; they’re also providing customers with a sense of community, while enabling their spending to be part of something bigger.
Financial services rooted in community aren’t an entirely new concept; the AmEx Black Card is renowned for grouping together the elite and serving them exclusive perks. But this model is becoming more attainable. Magnises is a members-only benefits card program with 30,000 members, each of whom pays £250 a year to gain access to VIP events, discounts and more. Meanwhile, US lender SoFi regularly invites its patrons to exclusive cocktail parties.
Existing institutions can align themselves with elite groups to similar effect. UBS launched its Planet Art app to make investing in the art world easier, simultaneously positioning it as the front-running financial institution for anyone who’s interested in this cultural niche – something it was already alluding to with its sponsorship of the Guggenheim.
This sense of community isn’t always built by the institution though – it can also be ingrained in the currency itself. The Bristol Pound – which is accepted in 800 establishments across the eponymous British city – ensures the people who use it that their spending supports the local economy, while Berlin’s Kreuzberg district boasts the highest concentration of establishments accepting Bitcoin in the world, further cementing its appeal to tech-savvy consumers with an appetite for all things anti-establishment.
To find out more on how to meet customer’s needs in an ever-changing world, read our whitepaper, Restoring Consumer Trust in Financial Services.