For all the possibilities of Fintech and despite how inevitable a digitally led financial future seems, progress in the industry is slow. This isn’t surprising; any technology related to personal finances will crawl its way to mainstream adoption for a number of reasons. Firstly, the technology needs to be there to ensure that products are genuinely more useful than the already functional bank card. Secondly, regulations are such that startups need to be overwhelmingly confident in the security of their products before they roll them out. And, finally, it simply takes a while for users to become comfortable using new technology, particularly when they perceive their finances to be potentially at risk.
On top of this, there is the fact that gimmicky Fintech hardware tends to make headlines as often as more impactful developments do. Ranges of jewelry and clothing that have payment chips built into them, or smartwatches that can be synced to mobile payment technology, may be noteworthy as ideas, but the real potential of Fintech lies in the software. There are a number of young Fintech companies looking to not only help users organize their personal finances and demystify banking, but to challenge the entire sector as a whole.
Rather than looking to revolutionize what users pay with – major tech companies like Apple and Samsung have this covered – startups are working to bring the card and bank account into the digital age with products that help users manage their money. One such brand is Curve, a London-based Fintech platform that lets users consolidate all of their cards one Curve card, which is linked to an app that pulls all the accounts into one. ‘Most consumers want the benefits of using multiple banks, cards and services, so they can make the most of their money’, says Shachar Bialick, Founder and CEO of Curve. ‘But managing it all and keeping on top of your spend isn’t easy. Now, it’s as simple as downloading the Curve app and getting started - with one card for all your spending, and one app to help you stay on track. It’s like having a ‘mission control for money’, in your pocket.’
This idea of the ‘financial control center’ is why Monzo has seen its incredible success. The digital bank has no physical stores, and requires a smartphone to operate, but is changing the way millennials bank and in many cases their entire relationship with their personal finances. The app helps users keep track of their daily, weekly, and monthly spend, separating purchases into categories so that they can see where all their money is disappearing to. Other features include being able to ‘freeze’ and ‘defrost’ a card when lost (rather than cancelling altogether), fee-free use of the card abroad, instant customer service in-app, and the ability to pay others with Monzo in seconds. The product’s success is proof that tech-friendly younger people are less attached to banking as an institution and more interested in organization and ease when it comes to their finances.
The success of Monzo is such that it can barely keep up with demand for its eye-catching pink cards and it has a waiting list for new users. The company recently released a current account, bringing it one fundamental step closer to becoming a viable option as a user’s primary bank. Up until the release, the mobile bank offered only a prepay top up card, which users had to load up themselves and couldn’t perform tasks like paying direct debits or receiving their paycheques. The app itself is novel and genuinely impressive, though, and Monzo has been able to build a large user base despite relatively limited functionality.
The criticism of Monzo’s current account offering is that it offers less than its competition financially. There are fewer incentives like cashback or interest rates, though it’s unclear whether Monzo will introduce these going forward. Ultimately, the startup will be hoping that its users are so attached to the impressive usability of the app (and, in my experience, they very much are) that they are willing to look past the benefits of using more established, traditional banks.
Those interested in Fintech should take the adoption of Monzo and the excitement around Curve as a promising sign for the industry. Fears that customers would be unwilling to put their hard-earned cash in the hands of digital entities are waning and, as the benefits of always-on banking take focus, more and more (overwhelmingly young) people are literally queuing to sign up. They should also take it as a signal of what the future of payment actually looks like. Other than perhaps smartwatches, it seems unlikely that gimmicky wearables will displace the tried and tested chip card any time soon, and it’s the software to support these cards that will see rapid development in the coming years. Those with the interests of traditional banks in mind should take the developments as a warning to modernize or fall behind.
So, Fintech is progressing about as quickly as you’d expect it to. It’s an industry in which the users aren’t quite ready for revolutionary change, but they are hungry for progress. Monzo, for example, has had its fair share of security concerns and technical issues to contend with, damaging problems when the information at stake is related to a user’s personal finances. New entrants into the market will need to be certain that their product is watertight before the can have any real impact. Change is coming, though, and a future in which traditional banks no longer hold places on every high street is becoming less fanciful as technology develops.