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A new book looks at the fast-changing world of fintech and how unbundling in other sectors is now reaching different areas of financial services, from small business loans to retirement planning.
The world of work is changing fast, with the rise of the gig economy and more mobile working, and the way we access our finances need to adapt to match it, according to a new book which charts the rise of fintech.
The Money Revolution by Anne Boden sees the changes which fintech start-ups are making as new opportunities, with a a greater focus on the customer – from greater simplicity and easier access to their money to greater transparency.
Boden, head of mobile bank Starling, argues that technological change means all aspects of the ways things have been done before are up for question because the old modus operandi is no longer fit for purpose. She says finance has been slow to respond to the disruption widely seen in other sectors, adopting a more cautious, wait-and-see approach. For her the disruption finally happening is “an opportunity to rethink our own individual attitudes to money and to unshackle ourselves from any previous negative connections in order to get the best from what is happening now”.
She talks of unbundling finance, the idea that there is no more loyalty to one bank for all your financial services, of a “more manageable pay-as-you-go society” and of the role of automation in providing accessible, low-cost access to investments and financial services, often by cutting out the middlemen and their fees. One example is paying for car insurance according to when you use your car rather than all year round.
Boden says that the ability to accumulate publicly available data from multiple points – from the shops people use, from the sites they visit and so forth – can be used by fintech companies to tailor products better to individuals and their needs. While there has been a lot of concern of late about how companies such as Facebook are using our data, Boden sees it as a positive. “There is less and less need for a one-size-fits-all approach in mortgages, savings policies and pensions. Products will be better geared to who you are and how you spend,” she writes.
All this will be – or is already – available via your smartphone, what Boden calls your ‘pocket bank manager’. She says the possibilities are endless with new apps addressing a panoply of different needs, including, for instance, an app that tracks the spending patterns of people in the early stages of dementia, with their permission, and alerts relatives of any looming problems.
The book looks at different areas of fintech in detail, from credit rating and insurance to loyalty points and savings, and highlights apps that Boden thinks are ahead of the game. These include apps to stop people overspending as well as apps to help them prepare for retirement or to enable small businesses to get easier access to loans. Boden says that, given people change jobs much more than in the past, they can end up with several small pension pots which are difficult to keep track of and some of which may not be performing well. Fintech companies like PensionBee have addressed this, coming up with ways to consolidate the money easily.
Boden ends by saying that she believes fintech will save people both money and time since they won’t have to waste it looking for the best deals. “All that will be done for you by your very own pocket digital bank manager,” she says. “This is a brilliant opportunity for everyone to create a more open and a healthier relationship with money, which only ever be a good thing.”
*The Money Revolution by Anne Boden is published by Kogan Page, price £12.98.