How Technology is Impacting the Personal Finance Sector

With mobile banking and independent investment services and mobile applications on the rise, new technology is reshaping the financial services and advice sector. But with no historical evidence to gauge the long term effects of individual financial management, it is yet to be seen what kind of long term effects these will have on individuals and the finance industry.

According to the most recent data from a Forbes study of financial services and advice, more than 43% of all financial businesses are working to make digital improvements to their business. With the evolution of technology, those changes look to empower the individual and facilitate a shift away from large institutions towards independent financial advice and independent financial management services.

How New Technology is Impacting Investor Behaviour

You don’t have to think too long or hard to look at the way that technology has impacted the finance sector in 2021. In January 2021, an online revolt from Reddit group Wall Street Bets saw a group of precocious investors use technology-enabled investment services to drive the share price of Game Stop to unprecedented highs. In what was seen as a protest against financial institutions, a group of internet investors were able to force the stock price of GME from $4.26 to more than $375USD in the space of two weeks.

While these new technology and investment applications are enabling investors to become more involved in their personal finances, they are also having an impact on consumer behaviour. While technology has been fast to adapt, the missing piece of the puzzle at the time of writing is an investor education and trust. The recent revolt against financial institutions indicates the consumer trust is lagging as new technology empowers independent trading and financial services to take centre stage.

Silicon Valley Empowering Personal Finances

Over the last 12-months, tech giants Amazon and Apple have launched their own credit cards and credit lines backed by established financial institutions including Goldman Sachs. These services have enabled customers to create virtual credit cards and take out lines of credit without the normal rigmarole associated with attaining credit from traditional financial institutions such as banks.

Many have been critical of the move citing the growing global debt as a real cause for concern. It is believed the technology companies getting involved with the financial services sector may have widespread ramifications on personal finances that may cause growing debt.

Final Thoughts

Developments in technology are allowing individual and advisors the freedom to focus on opportunities with greater visibility on the end to end process of financial investment. New technology trends mean that advisors face harder questions and are being forced to rationalise their involvement in personal finances more than ever before. As individuals feel empowered to take control of personal finances, established advisors must prove their value to the individual.