The future of money
Claer Barrett is consumer editor of the Financial Times and hosts its Money Clinic podcast.
Today, it’s possible for us to open a bank account online in a few minutes. Yet generations ago, this basic act of financial independence would have involved a face-to-face grilling with the local bank manager and, quite possibly, the signature of a male relative. Thankfully, women’s financial lives are no longer seen through the lens of who they’re married to and, rather than trying to control us, financial providers are competing to give us the greatest visibility and control of our money. Plenty of these trends have been accelerated by the pandemic. ‘Whether it’s managing our pensions and investments online, building a new side hustle on social media, or ordering same-day groceries, the rapid pace of technological development can sometimes mean we forget what life was like before,’ says Davinia Tomlinson, co-founder of Rainchq, an online community that helps women take control of their finances.
The pandemic has shocked many women into getting their finances sorted and thinking about investing for the first time. Technology is making the world of investment less intimidating and more accessible, as well as lowering costs. The rise of ‘robo advisers’ has given investors the ability to build a balanced global portfolio to suit their risk appetite in just a few clicks. The more adventurous can use smartphone trading apps to buy and sell shares in companies, or even cryptocurrencies – and, if you’re unsure, investment platforms use algorithms, quizzes and videos to deliver more effective financial guidance. Finally, one of the greatest benefits of fintech is removing the hassle factor. Of course, it’s important to stay on top of our finances, but we all have things we would much rather be doing. Digital-first companies are making it simple to nail complicated financial tasks that used to take for ever, such as staying on top of taxes, consolidating old pension pots or making a will online. The rise of open banking means we can opt to give regulated providers digital access to more of our data, making it possible to find a better mortgage deal in minutes, save money seamlessly by automatically ‘rounding up’ our digital spare change, or cancelling unwanted direct debits. What next? In the coming decade, we will almost certainly see the death of cash as a payment method. An estimated 13.7m people in the UK led a so-called cashless life in 2020, using cash only once a month or not at all – almost double the 7.4m in 2019, the growing trend accelerated by the pandemic and the increase of the contactless payment limit to £100. While there’s no denying how convenient going cashless is, there are concerns this might disadvantage older and vulnerable people. It’s possible that banking brands will be edged out by tech companies, smartphone-based payment systems and even cryptocurrencies. Although there will be privacy concerns, as more of our financial data turns digital, the potential for AI (artificial intelligence) to evolve cheaper, more intuitive and time-saving financial services is an exciting one.
It’s possible banks will be edged out by tech companies