The first year of the 2020s is poised to become a significant one for personal wealth trends. Will it be the year when big tech finally starts to take over traditional banks? How will demand from maturing generations like Generation Z impact personal wealth products and services?
For consumers, looking to the year ahead helps them clarify what to expect, while providers like tech companies need to stay ahead of the trends to anticipate customer behavior and market competition.
Whether you’re a consumer or provider, here are five trends that highlight the potential challenges, opportunities, and drivers to keep in mind for the coming year.
1. More Customer Insights From Providers
As fintechs and banks continue exploring technology tools for enhancing their personal wealth offerings, consumers could have access to more analytics and insights to support their services. These could be enabled by AI, big data, and other technologies.
For example, consumers could receive advice on overspending, reminders for bill payments, and security alerts for potentially fraudulent activity. Account holders could receive highly personalized insights for achieving financial wellness and their money and life goals as well.
This type of customer-centric and individualized advice doesn’t only offer customers more convenience and free, relevant advice; it can help providers in building stronger relationships with their customer base.
2. Peer-to-Peer Lending
The coming year will likely see tech companies making further inroads in innovative digital-lending products for consumers. The peer-to-peer (P2P) or social lending market is likely to continue accelerating in growth, with the North America and Asia-Pacific markets leading.
Both borrowers and lenders are driving demand for these alternative-lending solutions, and the P2P lending market is expected to hit $460 billion by 2022.
Behind this phenomenon is growing awareness about the benefits of P2P solutions like greater money transparency, higher potential returns for investors, and possibly lower interest rates for borrowers.
Additionally, transactions could become even easier in the coming year. For example, lenders can send money to borrowers directly through an app, and transfer times could be further shortened. With this could come more stringent regulation to protect consumers and more transparency from P2P lenders to give lenders greater confidence.
3. A Proactive Approach to Rising Challenges
2020 could bring with it a range of personal finance challenges. These could include rising debt loads, higher unemployment, and a dire job market, expensive housing markets, and other challenges to household finances that consumers will be looking to manage.
Consumers could be responding to these challenges more proactively, by drawing upon traditional advisors like financial planners as well as non-traditional solutions like fintech products and services.
These solutions could include the P2P products mentioned above. Holding more cash for emergency funds could be another way consumers deal with these challenges in 2020.
4. Customer Wellbeing and Experience
The trend towards focusing on customer wellbeing and experience — rather than bank profits — is likely to continue growing in 2020. Consumer demand for simpler, low-cost, or free accounts and products to manage their personal wealth and finances will further drive providers to adjust their product offerings.
Examples include no-maintenance-fee and no-surcharge accounts and prepaid debit cards for smarter money management and earning rewards. Other examples are apps for tracking saving and spending with simple, accessible, easy-to-understand reporting tools; and perks and rewards for healthy financial habits.
Supportive services empowered by technology, like automated assistants and chatbots along with automated security measures to help companies prevent fraudulent activities, will further enhance consumer experiences.
5. Generation Z Shapes Personal Wealth Products
Personal wealth products and services will increasingly address the demands of the up-and-coming generation: Generation Z. Banks, non-traditional lenders, and the fintech sector will be looking to fulfill the needs of this group, the oldest of which is approaching 24. So how will Gen Z shape personal wealth?
This group is likely to be the most demanding consumers in human history, and at the same time they are more fiscally conservative and seek out ways to stay out of debt and build financial security.
Personal wealth products and services will be driven to revamp outdated processes and explore new digital avenues for communication such as virtual reality. Providers will offer novel products like facilitating savings rewards for doing household chores. They will concentrate on mobile banking with a transactional rather than relational approach to services.
Demand and Technology
While the basics of building personal wealth — spend less than you earn and invest and save wisely — never change, 2020 could bring some transformations in how consumers will achieve this and how banks and other providers will support their customers.
Both customer demand and enabling technology are likely to continue shaping personal wealth in 2020. How consumers interact with their providers, the types of financing they can readily access, and economic conditions like rising debt are all part of the picture.Opinions expressed here are the opinions of the author. Influencive does not endorse or review brands mentioned; does not and can not investigate relationships with brands, products, and people mentioned and is up to the author to disclose. VIP Contributors and Contributors, amongst other accounts and articles, are professional fee-based.
Luke Fitzpatrick is an academic speaker at Sydney University. He enjoys writing about tech, productivity, lifestyle, and is a contributor to Forbes.