When Finance Meets Real Life
The financial landscape is rapidly evolving, with a growing emphasis on integrating financial services seamlessly into consumers’ daily lives. A new report from Rise, created by Barclays and Rainmaking explores this evolution in their report, “When Finance Meets Real Life.” The report, released as part of The Innovation Spotlight Series looks at the convergence of finance and real-life applications, driven by technological advancements, economic pressures, and regulatory changes.
Key Drivers of Change
The report identifies several key drivers reshaping the financial sector:
- Economic Pressures: Rising inflation, the cost-of-living crisis, and increasing interest rates are making it harder for individuals and businesses to access credit. These challenges are pushing consumers to become more resourceful, while businesses are shifting focus towards sustainable growth rather than relying on abundant venture funding.
- Artificial Intelligence and Personalisation: AI is increasingly being adopted across industries, with nearly 18% of global venture funding in the first half of 2023 going to AI-related companies. AI’s potential to transform financial services is immense, particularly in areas like customer experience and regulatory compliance. Personalised financial services, powered by AI, are becoming crucial as consumers demand more tailored and context-specific offerings.
- Regulatory Catalysts: New regulations, such as the UK’s Consumer Duty and the EU’s Green Deal, are shaping the future of finance. These regulations aim to protect consumers and promote sustainability, while also driving innovation by setting higher standards for financial products and services.
- Embedded Finance: The embedded finance market, valued at $65 billion in 2022, is expected to grow significantly by 2027. This model, which integrates financial services into non-financial platforms, is revolutionising how consumers access banking services. Examples include the growth of Buy Now, Pay Later (BNPL) services and other point-of-sale financing solutions.
Thriving in a Seamless World
The report also highlights the growing consumer expectation for seamless financial experiences. The report discusses how embedded finance can help banks integrate services more naturally into everyday activities to reduce friction for users. The challenge for financial institutions is not just about offering these services but making them intuitive, timely, and relevant to each customer’s unique needs.
Personalisation and Consumer Engagement
Personalisation in financial services is still catching up compared to other industries. While consumers can personalise products like M&Ms or choose customised content on Netflix, financial services often lack this level of customisation. The report argues for a more sophisticated use of data to predict and respond to individual customer needs, creating a more engaging and relevant banking experience.
Making Money Talks Easier
The report highlights the importance of making financial discussions less intimidating and more accessible to consumers. With rising debt levels and financial stress, financial institutions need to provide empathetic support. This includes using AI and other technologies to simplify interactions and make financial advice more accessible.
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From payments to banking to wealth management, innovation is moving along at pace, fueled by an evolving, digitally savvy customer base. The Innovation Spotlight Series explores themes and trends within the world of fintech, and how they can impact all our lives.
Photo by cottonbro studio: https://www.pexels.com/photo/person-putting-coin-in-a-piggy-bank-3943716/
