Finance can often be perceived as complicated and boring, but it is also fundamentally important to the way we live our lives, as well as our mental wellbeing. People with problem debt are twice as likely to develop major depression than those who are not in financial difficulty.
Money is something that is always front of mind for me, both in my career but also personally. What’s become very clear is that money is more psychologically and emotionally charged than it is often given credit for. PWC’s 2019 Employee Financial Wellness survey revealed that 65% of women and 52% of men said that financial matters cause them the most stress.
When thinking about finance, many people immediately think of tall grey buildings, men in suits, long words and even longer explanations. Finance is something for other people, something which sits just out of reach of being easy or engaging, something there to be regularly ignored.
Except that the opposite is true. In fact 94% of us worry about money. That’s a whole lot of mental energy being used in an unproductive and also in quite a damaging way.
Fintech is changing this
In the pre-digital banking era, consumers were disenfranchised and under informed. They incurred overdraft charges when they didn’t know they were overdrawn. They had to actively seek out ways to better manage their money. Financial technology is changing this at a rapid clip. Now, some banks notify us when we are close to becoming overdrawn. Some suggest smarter ways to manage our finances via their apps and online banking, personalising the digital consumer experience.
Whereas in the pre-digital world saving meant trying not to spend money or actively choosing to put it aside, we now have automated savings technology sweeping money out of sight and out of mind. This enables us to easily run and organise our money across multiple accounts. To paint a bit of a picture, I personally have in excess of ten, something that would have been somewhere between unwieldy to completely unmanageable in the pre-digital era.
As an industry, we still have a long way to go to achieve a truly customer-centric experience across all platforms and areas of banking, but progress is progress and already financial experiences feel so much more positive than they ever did before. Speaking as someone who’s pretty focussed on these things, I’d actually go as far as to call them satisfying.
A personal example of insight-driven financial action
Pensionbee offers an excellent digital customer experience. Logging in with Face ID on my phone and seeing my pension account flash up on my screen honestly still blows my mind; I’ve been with them for 2 years.
Before they came along, I was painfully digging out old documents and resetting my login details every time I willed myself to figure it all out. Always ending up with no greater understanding of how much money I had or how it was being invested.
Now I can change my direct debit, process one-off payments and get my HMRC tax break straight away, and I can actually see it all in the app. Because of the retirement planner tool, I know what my pension shortfall is (because honestly who doesn’t have a shortfall, particularly if you are female). And because setting up a direct debit is very simple, I can do something about it.
This example may seem like a plug for Pensionbee (and it is!), but from an everyday customer. I have no commercial relationship with them, I just love what they do.
Informed, empowered, happy
The reason I love PensionBee so much is that the way it has been built delivered a hugely important personal outcome. By paying into my pension every month to make sure I get where I want to be with retirement, a huge weight has been lifted off my shoulders. One that I knew I had, but had at least partially ignored due to the complexities involved. That didn’t mean I didn’t regularly worry about it. I just didn’t feel I had the tools to take positive action.
Moving from a corporate environment to the world of startups, a lot of typical benefits I’d taken for granted were removed and the onus was on me to drive my financial stability. I guarantee you that without fintech I would not have done this. I would still feel the shudder at any mention of the word ‘pension’.
Focussing on personal outcomes
This kind of meaningful personal outcome is what we should all be striving for in the finance industry. It shouldn’t just be a matter of “here is some information”, but instead, “here is some information that’s relevant to you and here are some options to help choose what to do with it”.
We should be making helpful suggestions to our customers, things like “Have you looked at opening an investment account? Based on your spending habits, you could afford to deposit £X per month.” Or things that support our customers’ financial futures, such as “It looks like you’ve had a salary increase, why not increase your pension contribution?”
This for me, is the ideal financial state. Where you don’t have to consciously work yourself up to engaging in finance.
The opposite of one size fits all for money.
Fintech allows us to embrace being different. And we are. From our earliest financial experiences of choosing to save or spend our pocket money, we each have a distinctive approach to making financial decisions.
Zoom out and look at the number of different levels of experience, engagement, understanding, cold hard cash, emotional attachment, life experiences, relationships etc. and the infinite combinations of these that occur for each customer and you start to understand that complexity and individuality that we’re dealing with. You start to see how every single financial decision and journey is different for every person on this planet.
And yet, money, this thing that is so important to daily life, that is fundamental to wellbeing and is so deeply personal to the individual, is treated the same as millions of other people’s.
If my bank doesn’t make sure I’m on the right track, doesn’t ask poignant questions, doesn’t nudge me into exploring new ideas or concepts, it fails me. If instead I see products and interest rates, I see you have enough or you don’t have enough, I see ‘open another account’ with no reason as to why...it fails to truly serve me as a customer.
Fintech enables financial wellbeing, but it’s up to banks to adopt it.
Fintech matters because finance matters, and technology is the enabler for each individual to maximise their financial lives. But it’s not just about technology availability, it’s about adoption by major banks. In a 2019 Financial Wellbeing Survey by Perkbox, just 13% of 18-24 year olds were taking any action to deal with financial stress.
This is a generation of digital natives. They have no challenges in personally adopting these technologies to help them. What’s holding them back is the lack of mainstream provision. It is only by creating these customer-centric experiences in traditional financial institutions that we can get back to what matters, rather than spending Sunday afternoons with rising frustrations as we attempt to navigate opening up a new account or logging into old pension pots.
For me fintech enables us to have a better understanding of our financial world to be able to make more informed, conscious decisions and take total financial control.