With the increasing use of technology in financial services, financial health should be the core target for benefitting both the customers and the financial service providers.
The Increasing Use of Technology in Financial Services
The rising use of technology in a variety of ways is disrupting the financial services industry. FinTechs are responding to the customer needs, need for innovation and optimization, and security requirements by implementing technologies like artificial intelligence, robotics, digital payments, digital identity, and blockchain. These technology integrations into financial services and products are used to increase the overall financial health of a customer.
For instance, blockchain technology is used as a security measure by financial institutions to tackle fraud. The integration of customer intelligence with robo-advisory services is becoming the next logical step in protecting and growing investments and helping people achieve their financial goals.
Simultaneously, with the advent of technology, the nature of financial services, and how receivers see it is changing across the globe. Investors are looking at not only growing their money and earning great returns but also at achieving financial wellness and sound financial health. Thus, technology should aim to provide financial health alongside financial services for full-fledged customer-centricity and the revolutionary transformation of the financial services industry.
What does financial health mean?
Financial health is a blanket term for the overall financial state of affairs of an individual. It includes how much the person is spending, saving, and investing. While financial health is positively impacted by sound financial decisions, meticulous planning, and support of financial service providers, the lack thereof leads to extreme financial stress and worries. Thus, financial health is not just reflected by the credit scores of people. It includes various other aspects, including saving and investment health, spending health, planning health, and protecting health.
Therefore, financial services providers must focus on uplifting individuals’ financial health rather than the effortless use of technology to provide better services. Reduced financial stress and improved financial health can improve individuals’ overall emotional and mental well-being, and that is why the use of technology for improving financial health should be the top priority of FinTechs and other financial services providers.
How can technology be used for improving financial health?
In today’s time and circumstances, technology is the ideal way of thinking about the next generation of financial services. However, Financial health should be at the heart of offering financial services. The aim should be to focus on reducing the financial stress of people, providing them a financially-balanced life, and catering to the overall financial well-being. The world needs right now is the paradigm shift from product-oriented financial services to customer-oriented services to improve financial health.
A large number of FinTechs are concerned about the financial health of the community and making substantial efforts towards it. For instance, a Fintech startup Monese is working at providing instant UK current accounts to the 1.7 billion unbanked adults in the UK to increase financial inclusion and financial wellbeing. Other platforms like Moneybox, Moneyfarm, and Nutmeg are helping people make their money go further with their robo-advisory services. The use of API in opening banking is becoming popular as it helps customers get a holistic view of their financial status and situation by consolidating their financial information from banking and non-banking financial institutions.
Opening banking also helps identify the best financial products and services to fit each customer. Companies like Finpoint, Bankware, Hope Macy, and Moneyinfo are currently using opening banking innovation to aid their financial products and services. The other players in the insurance and employee wellness space are also using technology to advance financial health over financial services.
Especially in the COVID and post-COVID times, when people and communities are struggling to face financial health challenges and recover from the chaos, the use of technology can go a long way in reducing financial stress and promoting financial wellness. Technology can be used to analyze financial transactions and financial data to stop people from falling into financial traps and avoiding financial blunders related to borrowing, saving, investing, and spending, hence improving financial health.
Thus, if FinTechs focus more on financial health, they have a better opportunity at bringing a much-needed change in financial services. It will help individuals achieve a higher level of financial wellness and be profitable for FinTechs to generate higher and sustainable revenues.