When the first ATM hit the scene in 1969, the way we experience money changed.
Before the ATM, we could only interact with our money during banking hours. So, the ATM revolutionized the "when" behind money experiences.
Accessing money 24/7 was a significant change in expectations, and fintech was right there to push the next expectation.
In 1995 Wells Fargo launched the first Internet banking site, revolutionizing the "where" behind money experiences.
Consumers can access their finances anywhere with WiFi and a PC.
Then, a company called PayPal launched in 1999, changing the "how" of money experiences.
PayPal revolutionized how we pay for goods and services and how we pay our friends back.
And the company keeps innovating. PayPal is changing the "how" on everything else, like how we give to our favorite charities or interact with and spend our rewards points.
If you go on PayPal, they're paying a higher amount for their savings account than most banks. So they're changing how we save, spend, and shop. PayPal is proving one traditional financial service practice at a time that fintech can deliver all these features through a single app.
Here's the thing about innovation: Many copycats pop up. While that's great for providing more access to financial services via fintech, it also means consumers are saturated.
In 2020, consumers downloaded 4.6 billion finance apps.
In 2021, 573 million downloads in the United States, and during that same period, we spent a total of 16 billion hours on finance apps.
That's the equivalent of 1.8 million years of human brain power spent on finance apps.
Why is this happening? Fintech apps focus on engagement and getting you to spend time there, and they're doing it incorrectly – like sharing lousy advice.
Take Venmo as another example. Venmo has you spending time inducing FOMO, so you can scroll through to see which friends of yours are hanging out with other friends who didn't invite you.
Consumers are wising up to the pervasive tech that has induced poor behavior. So:
- We're going to expect more
- We're going to expect better
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We're going to expect the what to change, and we're going to expect the whom to change.
What does that mean exactly?
Well, we've got this mess of fintech apps we're supposed to trust by linking our accounts, taking loans, BNPL, and investing in fractional shares of things, which are great for access.
But these tools need to get to the foundation of helping build wealth.
As our financial habits evolve, it's clear that all generations are taking a more proactive approach to their money, striving to make intelligent decisions that will benefit them in the long term.
No longer are we content with just living for short-term gratification (get-rich-quick schemes are so 2019) - we're thinking ahead!
Once considered asset managers meant to make portfolios grow at whatever cost, financial advisors have evolved into behavioral coaches who improve their client's quality of life.
So consumers are about to ask for better tools from companies. That's where wealth tech comes in. And investors poured $8.8 billion into the fintech subsector in 2022 and $15 billion in 2021.
The companies you trust and spend the most time on, like Apple, Amazon, and Visa, will start embedding traditional financial services in a way they haven't done before.
Expect companies like Discover to launch investments and financial planning.
American Express is already on its way. In addition, the finserv funded a startup BodesWell to build a financial plan and deliver it through their app.
With the right mix of behavioral and embedded finance, there's a significant opportunity to turn access into meaningful wealth building.