Fintech megatrends are transforming our relationship with money

The Wharton Global Youth Program Future of the business world The online course asks high school students to think deeply about how the business landscape will change over the next 10 years.

When we recently posed this question to teens around the world, many responded with observations about technology, machine learning, artificial intelligence, and pressing social and environmental issues. A few apps mentioned like Venmo and PayPal are fundamentally changing the way we interact with money.

This is where our starting point is: the intersection of finance and technology, which is so much more than an app on your phone – in fact, it involves all of those influences above that are transforming the business landscape. It’s fintech, and it’s the future of businesses.

We recently marked Zoom time with someone at the forefront of fintech, both as the founder of a startup and as a freshman Wharton MBA who is the new president of the Wharton Fintech Club. Nathan Soffio spent 10 years in product engineering at tech startups, some of which focused on finance, and is considered a fintech guru.

That’s why we asked him the following question: In what critical ways is the FinTech industry changing personal finances (which is appropriate given that April is Financial Literacy Month in the States? United) and influence the future commercial landscape?

First of all, he explains, fintech is not really a stand-alone industry: “Fintech connects to almost everything we do in the digital age, which is why it is so crucial that it continues to grow with transparency and fairness, ”says Soffio, whose startup Proofetch focuses on financial inclusion and helps people access major chequing and savings accounts, even if they weren’t previously a part of the traditional banking system. ” Order online ? Fintech. Split a Venmo payment? Fintech. Apply for a loan? Fintech. FinTech aren’t just the apps you use to pay and get paid, but everything that involves making that money work for you, making sure the money is safe wherever it goes, and keeping it safe. ensure that you can get smarter and healthier with your money over time. “

With this, Soffio identifies four macrotrends in fintech. Fasten your financial belts, as these digital developments will make you interact with money in new and provocative ways, while inspiring innovation and transformation in business.

  1. Embedded banking. Integrated banking describes banking-like services that live in all kinds of other applications that are not real banks. Yes, Venmo is an example. Soffio describes it this way: you have apps that deliver a smooth user experience, then you have a middle layer of businesses that do banking as a service and let you manage checks, savings, and payment sharing. without interacting with an actual bank, then the bottom layer below is traditional chartered banks. “Financial apps will continue to get more interesting, cooler, smoother and more functional as they move further and further away from any kind of underlying bank. It’s integrated finance, ”notes Soffio.
  1. Financial health and well-being. Apps like Mint and Credit Karma have grown over the past five years, aggregating consumer data that helps them make smarter financial decisions based on their lifestyle and past choices. This trend is gaining momentum, suggests Soffio. “Data will be easier to use, and more financial institutions and applications living near consumers will reject useful data that financial health and wellness applications can use more effectively,” notes he does. “Financial service providers will be put in a position where regulators will force them to publish their data in a way that makes it easily parsable. The apps themselves will get better at providing suggestions and recommendations on what people should do. The other side of the coin? Not all of this advice will be sound. That’s why, Soffio cautions, it’s always important to learn the basics of money management in school and in your community so you can distinguish between good and bad apps. Technology is not a substitute for strong financial skills.
  1. Get paid. Soffio anticipates innovation around payroll, which means the salary you earn will be paid to you with more flexibility, rather than the traditional paycheck every two weeks or once a month. “I think it’s interesting how many people are freelancers and creators and part of the odd-job economy these days,” Soffio says. “There will be a very exciting growth in flexible payment apps or flexible payment options, as the plumbing between consumers and banks will get a lot smarter by all of these businesses that live in the middle. “
  1. Cryptocurrency and blockchain. Soffio calls this the “strangest” fintech megatrend because there are so many uncertainties – and yet it makes his top 4 because he is all over. Since last week, for example, you can buy a Tesla with bitcoin (digital money); However, Soffio predicts, “I don’t think I can buy a sandwich with bitcoin anytime soon.” And then, of course, there are the NFTs or non-fungible tokens, which are unique (with value) tokens on the blockchain. Stay tuned for a separate story exploring NFTs, which are both cool and somewhat complicated. For now, however, Soffio says blockchain technology, a system for recording information in a way that makes it almost impossible to change, will inspire better financial record keeping. As for real cryptocurrency, he is enamored with the concept of central bank digital currency. Through this, central banks can bring digital money into the economy without affecting inflation rates or devaluing the currency – and potentially helping underserved people outside the traditional banking system to access d ‘other sources of funding.

Conversation starters

How has your relationship with fintech changed during the pandemic? Are you relying more on apps to manage your money? Which is your favorite and why?

Which of the four fintech megatrends speaks to you the most and why?

If you could tackle one problem related to finance, what would it be? Learn more about this particular challenge, then discover four ways you can be part of the solution.

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