The time when we had to write checks or go to the ATM to withdraw money has gone with the wind. In the technology era, banks have moved to smartphones. It affects various finance areas, including payment methods, personal finance, savings and investment, insurance, and wealth management.
As a design agency, we are directly involved in the finance services digitalization. Several cases of fintech designs like Sage Express AI-driven tool or Klasha app have deepened our interest in financial technology. In this article, we share our findings about the impact of fintech on consumers.
What is Fintech?
Financial technology (FinTech) is a broad term that refers to software, mobile application, website banking, and other technologies that improve and automate financial services’ use and delivery. Fintech covers numerous innovations, from mobile payment apps to sophisticated blockchain networks, AI algorithms, cloud computing, and Big Data processing.
Another meaning of fintech is connected to any business that adopts technology to compete with traditional banking systems. Some well-known examples are Zelle (a peer-to-peer payment service), Wealthfront (an automated cash management assistant), and the Ethereum trading platform.
In a nutshell, financial technology and companies strive to improve financial process management. With its help, customers can meet financial obligations, take control of their spending, make informed decisions, feel secure in one’s financial future, and more.
Fintech Effect: The Impact on Consumers
First of all, let’s figure out how widespread fintech is. There is a common misconception that digital financial services are used primarily by wealthy or tech-savvy consumers. However, a recent report by Plaid shows that fintech was adopted across various demographic groups in the US and UK in 2022.
Let’s explore these findings in more detail:
- 48% of Americans manage their finances with fintech daily, while the number of UK respondents is even higher - 84%
- In 2020, fintech adoption shifted towards higher earners. But in 2022, rates by income converged at around 80% across the three income spectrums (of less than $50K, from $50 to $100K, and over $100K).
- Both genders use fintech almost equally – 82% for men and 78% for women.
- Despite some consumers among Baby Boomers dropping off in 2021, the average number of fintech apps used per person increased by 10%.
Sadly, a large part of the world’s population still lacks access to the internet, a basic bank account, or insurance. Nevertheless, Statista predicts the global growth of consumers using Digital Payments from 4.16 bn in 2022 to 5.48 bn by 2027.
The numbers describe the tremendous growth of fintech worldwide. Consumers discover that technology significantly streamlines complex financial tasks and proposes more effective ways to manage money.
Here is the summary of the main benefits pointed out by US and UK consumers in a 2022 survey.
Here is what they what fintech solutions helped them with:
- Better understand the financial situation and feel more knowledgeable
- Reach financial goals
- Reduce fear and stress of managing money
- Increase financial confidence
- Facilitate money management
- Build better financial habits (like sticking to the budget or saving money)
- Recover from a financial mistake (for example, missing a bill payment and getting out of credit card or student loan debt)
- Gain control over spendings
- Save time (for instance, by depositing checks virtually instead of going to the bank, managing taxes online, etc.)
- Save money (for example, automated payments reduced late payment fees)
How Fintech Products are Transforming Financial Services' Customer Experience
Consumers' expectations evolve along with the global development of fintech. Nowadays, the quality bar for financial services is set high. Such products should meet users’ most crucial demands and help them reach economic well-being.
Accessibility
The first impact of fintech on financial services is that people want to manage their money from anywhere. Therefore, instant access to payment and billing options has become a must.
Another vital aspect is the compatibility between apps and various payment services (PayPal, Venmo, ApplePay, etc.) For some consumers, the ability to pay bills through a banking website is also critical.
Easy-sign up
73 % of Americans say that easy sign-up defines whether they will keep using an app. Thus, smooth onboarding is one of the first priorities. Nevertheless, it’s worth balancing between the seamless sign-up and security measures during identification.
Control
Users show a distinct desire to control their finances. Fintech should regulate outcomes according to the budget, provide programs to file taxes, suggest investment tools, andpayroll advance services.
Personalization
Consumers adapted to ridesharing, delivery apps, video conferencing, and other services focused on their individual needs. Unsurprisingly, they expect the same personalized and frictionless experiences when using fintech.
For example, segments like personal financial management (PFM) or WealthTech could build tools that consider users’ spending behavior, savings, investments, pension planning, and so on.
Trust and Transparency
Consumers tend to evaluate fintech apps by their privacy practices and transparency. And it doesn’t end with protecting users’ information. It’s also about informing people how the application uses their financial data and letting them make decisions about processing their private details.
Security
Fintech is a relatively new sphere with fewer regulations than traditional financial institutions. It leads to rabbit holes for cybercrime and creates risks for consumers because of the potential harm through sensitive financial data. The most common example is fraud involving stolen smartphones. Therefore, fintech consumer protection measures like multi-factor authentication are critical.
Financial literacy
Consumers appreciate when fintech products offer tutorials and detailed guidelines on using apps and managing finance. Sadly, there’s a lack of awareness about various topics like creating an emergency fund, improving credit score, building a savings habit, or using investing tools. The services that help customers learn those things will undoubtedly remain top-of-mind.
Fintech Helps Consumers Weather Economic Challenges
Fintech came to the rescue during the COVID pandemic when the banks had to restrict the physical attendance of customers. Under these stressful conditions, online banking and mobile payment apps provide more freedom and control of people’s finances. On top of that, they reduced the fear of economic turbulence.
Economic stress didn’t end as the pandemic ebbed away, though. Concerns about the cost of living, fuel prices, recession fears, healthcare expenses, and job market issues accompany consumers permanently.
No matter what economic uncertainty lies beneath consumers’ worries, fintech should assist in withstanding those challenges. In particular, it may improve personal and business finance management, including the following aspects:
- Reduce stress by clarifying the spending
- Ensure more efficient budgeting
- Provide instant digital access to save time and effort
- Tracking milestones to financial goals
- Build an emergency fund and more.
Conclusion
Recent years have shown the positive fintech effect on consumers. Technology improves the understanding of their financial situation and simplifies money management. Moreover, it enables better control over spending, saves time and money, and becomes a barrier against economic turbulence. As a result, consumers have developed a sustained appetite for technology-driven innovation in finance.
Arounda has been in product design for more than five years. Nowadays, we observe a significant fintech impact on economy and are thrilled to be part of the global financial landscape transformation. In 2023 alone, we have developed UI/UX design for three fintech projects – check them out in our portfolio!
If you have a promising fintech solution in mind and need design assistance, we are here to help.
