Financial Apps Will Make People Smarter and More Open About Money
Socially acceptable topics of conversation are always evolving. It’s no longer uncommon to hear discussions about religion and politics at the dinner table. However, there’s still one incredibly important issue that most people would just as soon sweep under the rug: finances. When was the last time you had a detailed conversation with your spouse, child, or friends about your finances, especially at times when money is tighter than you’d like?
This taboo has serious consequences. Marriages struggle—a 2009 Utah State University study found that couples who disagree about finances at least once a week are 30 percent more likely to get divorced than couples who do several times per month. The inability to retire on time is another huge risk. Is it surprising that 49 percent of Americans are not confident they’re financially prepared for retirement when only 46 percent of them have even talked to their partners about how much money they’ll need to retire?
For a long time, accountants and investment bankers were the only resources available to people unwilling to ask their families and friends for financial advice. This system had its advantages—namely, highly personalized advice—but ultimately, many people didn’t have access to a dedicated advisor or didn’t have time to talk to them every time a problem came up.
Then consumer-facing financial technology came along. Over the past decade, personal financial management tools have consumerized financial data, presenting it in ways that are easy for users to understand. With this data, users are able to make smart choices with their money and improve their general quality of life.
But despite these advances, finances are still a source of immense stress for many people. In addition to marital and retirement stress, a recent Employee Resource Benefits Institute survey found that 55 percent of American workers are concerned about their level of debt—and this does not include the 7.3 percent of employable Americans who are not working at all.
A sluggish economy and job market are to blame for some of this stress. But when 56 percent of Americans do not maintain a budget at all, and the average American family is only on track to cover 34 percent of its college savings goal, the financial technology industry clearly still has work to do before it can support the entire financial planning process.
One big way these financial apps will change is in how they organize and present financial data. Instead of just organizing data by transaction type, there will be a greater focus on supporting the financial relationships in peoples’ lives. Social peer-to-peer payment apps are already doing this for small payments between family and friends. Others are doing the same in the online banking space, allowing groups of people to securely manage shared finances from anywhere, on any device.
As these financial collaboration tools gain traction, and financial discussions become easier and more common, stigmas against those discussions will become less severe, and shared finances will be far less susceptible to neglect and fraud.
Also, instead of just knowing how and when people spend money, “FinApp” developers and users alike will gain insight into what places and with which people they feel comfortable managing and talking about money. They will understand which tasks users will happily complete on smartphones, tablets, computers or even smart watches. This new breed of financial data will power further FinApp innovation and help consumers build financial plans fitting the full spectrum of their money-management habits.
Consumer finance apps will also become smarter, more predictive and more integrated into people’s daily lives. New apps will learn from our financial habits and use this knowledge to predict future behavior, in the same way that apps like Google Now and Tempo Smart Calendar do. They will use the semantic recognition technology made famous by Siri to make financial data easier than ever to input. They will use geo-location technology to sense where users are—at a bank, at a store, leaving the house—and offer relevant, timely advice and reminders. They will even warn users when they’re about to make an irresponsible purchase.
Through these advances, financial technology will be able to offer us the same personalized financial advice that was once only available from accountants and investment bankers. And with this new level of support, people’s personal relationships will be more resilient. Paying for college will become less of a concern. Small-businesses owners will spend less time worrying about finances and more time innovating, and more workers will be able to retire on time. We’ll have a more financially informed society and a stronger economy, and that’s a world I want to see.