Technological Innovations in Personal Finance

Technological innovations and Change in Managing our Money

Technology has had a huge impact on pretty much every aspect of how we lead our lives today. The way we work, the way we socialize and the way we communicate can all now be somehow facilitated by the diverse range of technological innovations available to us. So much so that we tend to take a lot of it for granted and quickly forget how inconvenient it used to be to complete certain tasks before we had such access. One area that has been changed almost beyond recognition is the way we manage our money. The world of banking has responded to the dramatic evolution of the world of technology by applying the latest thinking, tools and techniques to provide an increasingly smart, convenient and efficient level of customer service. Even the most technophobic individuals would find it hard to argue against the improved access and control we have over our personal finances today: a situation that has come about thanks to technological innovation.

Pros and cons

As with the impacts of any kind of major development, there are both benefits and disadvantages.

On the plus side, we have massively improved access to our finances. Internet banking means we are able to not only view our financial products, but manage them with unprecedented independence and control. This improved access means that we have in general developed a far greater knowledge of what is available to us, which has enabled and empowered us to make the most of all our financial products as a result. Suddenly, the world of financial investment does not seem quite so complex and daunting and the market for financial products is more open than ever.

A knock-on effect of this is that we, as consumers, expect a lot more. Technology has made it easier than ever to research other options and switch to new providers. We can be a lot more demanding of financial service providers because of this, so there is a far greater level of competition across the industry, which is great for consumers.

Of course, while this is positive for consumers, some commentators believe it has led to an increase in disputes between banks and their customers. Greater insight means that you are more likely to question and challenge, and this has led to some extremely visible disputes, which are incredibly harmful to the reputation of any organization. For a company like a bank, which relies so heavily on trust, it can be disastrous.

Take PPI (payment protection insurance) and the rise in refund claims due to the widely-publicized change in the law. If you’re with Halifax PPI, for example, you can now claim quickly and easily online, supported by experts in this very area, without ever needing to leave the comfort of your own home.

Technology in financial services

Here are just a few ways that the financial services sector is already employing the latest technology, and how this has changed the relationship between banks and their customers:

  • Mobile - not so long ago, banking online seemed almost impossibly futuristic. Today, you do not even need to switch on your laptop. Bank accounts and other financial products can be accessed and managed on-the-go. Wherever you are and whatever time of day or night it might be, all you need is an internet connection to transfer money, pay bills and even buy new products. In addition, smartphones are taking the place of cash and credit cards as more and more people use them to pay for everyday purchases. This has changed the banking landscape dramatically as banks encourage customers to adopt this self-serve approach. One of the main reasons for this, of course, is that it can potentially reduce a bank’s overheads significantly as the need to run expensive premises with large numbers of staff massively decreases.
  • Customer relations - the way organizations and their customers interact has changed enormously, and this is true in the banking sector as much as anywhere else. While people become more empowered to manage their own finances, the need to wait until a branch opens and speak to people face-to-face becomes almost obsolete. Companies therefore need to look for new ways to speak to their customer-base in order to maintain good relationships and create new ones. The wide range of internet-based platforms are a huge part of how they are now achieving this, and more people than ever before are engaging with their financial advisers through the online world enjoying the ease, speed and convenience this offers.
  • Social media - any organization serious about future success needs to make sure they have a strong presence online, and the strongest presences at the moment are invariably those achieved on social media. Platforms like Facebook and Twitter are phenomenally popular and provide a whole new means of engaging with audiences. The financial services industry has a reputation for formality and seriousness, which is perhaps only to be expected given the importance of what they do and the potential risks involved. As a result, people have historically preferred their financial service providers to behave with a certain gravitas. Today, however, the most innovative banks recognize that people want a different sort of relationship, and social media provides a friendly, informal and immediate way to generate exactly that.

The future

As technology continues to evolve at a truly remarkable pace, the smartest and most forward-thinking industries are working hard to keep up with this and enjoy the benefits as a result; benefits they then pass on to their clients and customers. The banking industry is no exception, and the way we manage our money today is almost unrecognizable to a couple of generations ago.

The pace of change is so fast, in fact, it is hard to conceive of what the future may hold even just a few years from now. One thing you can be certain of is that while the financial services industry continues to invest heavily in this area and compete for business, there will continue to be many exciting opportunities to get even better control over your finances than ever before. It pays, quite literally, to keep up with these changes and make sure they work in the best possible way for you.