The rapid advances in technology are changing everything about the world we live in, from how we make friends to what we eat, how people communicate, and so on. Finance is an industry that is also undergoing a technological disruption as traditional methods of operations are being replaced by new ways.
Many people find it difficult to save money because of their expense-focused lifestyle. But new initiatives could soon help solve this problem, at least partially. Apps like Qapital, Acorns, and Digit now allow users to round up their payments by sending the difference to a savings account. For instance, if you were to spend US$4.45 in a store, the app would automatically put US$0.55 in your savings account.
Though this might seem like a small amount, saving a dollar a day can actually build you a pretty good savings account over a period of time. In the near future, apps will probably allow you to save a fixed percentage of your spending in savings. So if you want 10 percent of the spending amount to go into savings, you will save US$10 every time you pay a bill of US$100. Such saving methods will work well for people who are obsessed with shopping since the savings factor is integrated into their impulse for buying.
The intense competition in the commercial payment industry is also driving the development of faster payment methods. Companies now want their payments to be cleared as soon as possible. Gone are the days of waiting to get the payment of a client cleared. The Clearing House, operated by America’s biggest banks, already uses a system known as Real Time Payments.
Smaller banks have yet to adopt this network. Moving forward, the wide adoption of the system will enable businesses to make and receive payments in seconds. The Federal Reserve is also said to be developing its own faster payment system. Tech firms like Google, Amazon, and Apple have already declared their support for the initiative. As company payments become faster, the economy will also function more efficiently.
“We are seeing, what I think is, an unprecedented amount of change that is being proposed and introduced in terms of [payment] operations… We’re starting to look at solutions that have significantly different modes of operations… Our [payment] systems are looking at 24/7/365 solutions. These present a really significant change, and, in some cases, disruption to the way FIs (Financial Institutions) are processing payments today,” Bill Schoch, WesPay president and CEO, said to PYMNTS.
Artificial Intelligence is going to completely change the world of personal finance. As banks start implementing AI solutions, they will improve operations like customer experience, back office tasks, risk management, product delivery, and so on. People will soon be able to manage their accounts without any human intervention. This will speed up banking activities for customers.
AI is already being implemented in the insurance industry in some countries where the technology is used to clear claims. This cuts down the waiting time of customers significantly. Banking institutions will be able to quickly analyze mountains of data and identify steps to be taken to provide a better customer experience or even to create new financial products.
Personalized customer service will become a reality. Instead of giving a flat rate of interest to people, banks can use AI to create flexible interest loans or savings accounts where the interest rates will automatically keep changing every day or hour depending on market conditions.