Fintech, short for financial technology, has pervaded the financial services industry. Pundits say that “the fintech revolution is coming”. Surely, though, it’s already here? Every week I receive a press release about a new chatbot or online tool for managing my money. So many financial transactions are possible without human interaction, from exchanging currency and choosing a mortgage, to “microinvesting” and monitoring your pension pot.
According to a recent study by Legg Mason, the asset management company, 46 per cent of millennials in the UK want to do all their financial planning on a smartphone, compared with 13 per cent of baby boomers. This reinforces another point on which the pundits agree — that millennials and fintech are natural bedfellows. As digital natives, we trust in the power of technology more than in the institutions that shattered our economy in 2008, when many of us were entering (or attempting to enter) employment.
The UK has been described as the world’s leading fintech hub (take that, Silicon Valley) and the Bank of England has welcomed challengers such as Monzo, Atom and Transferwise. Mark Carney, the bank’s governor, spoke this year of “a fintech revolution that will democratise services”, although he also expressed concern over how it could destabilise the sector.
One particularly intriguing aspect of the “revolution” is robo-advice. This type of technology, fuelled by artificial intelligence, is an attractive option for young, less confident investors. It poses a challenge for financial advisers who have traditionally delivered their services face to face, but it also represents “an opportunity to make financial planning jargon-free” and significantly more accessible, says Mark Grimes, the product director of Evalue, a financial technology company that works with several UK banks.
He suggests that if fintech developers continue to plough resources into creating everyday, easy-to-use electronic tools, “personal financial management will become second nature” to my generation. More of us will be encouraged to look beyond Isas and towards long-term savings and investment options.
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Unlike baby boomers, millennials are less impressed by professionals. Robo-advisers and online wealth managers, such as Nutmeg and Wealthify, suit those of us who want the ease of managing our money digitally without having to pay hefty fees. They also deal with smaller savings, while some independent financial advisers impose minimum investment amounts. Wealthify allows a £1 initial investment. While we desperately attempt to build up our assets, it’s little wonder we’re putting our faith in fintech.
