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Next Generation Personal Finance

© by Photo courtesy of Flickr

As the smartphone revolution continues apace, we take a look at the readily available suite of technologies now carried around in our pockets, and how through three broad trends they stand to revolutionize the way we manage our personal finance and budgeting.

Digital Banks

Initially, digital banks weren’t considered viable alternatives to the established traditional banking corporations. However, the disruptive quality of the growing smartphone market, coupled with a growing popular distrust of large banking institutions born out of the 2007 economic downturn, have paved the way for a new generation of challenger banks focused on innovating in the sector. App-based banks offer depths of integration and ease of use that have left many traditional banks scrambling to recover lost ground. By centralizing their banking operation to an app on your phone, they are able to offer levels of accessibility, convenience and integration that is unrivalled by brick-and-mortar institutions. 

App banks are able to provide you with real-time notifications pertaining to your financial activity and to streamline various services including savings, with some banks offering a feature that rounds-up spare change and automatically deposits this in a savings account. Additionally, most feature zero overhead fees on overseas transactions, and as such are uniquely well suited to those whose lifestyle involves frequent international travel. Among the largest of these challenger banks are Revolut, Monzo and Starling Bank, though it’s a rapidly growing sector with new banks appearing to accommodate different consumer requirements.

Virtual Wallets

Software-based wallets are a natural development arising out of the shift towards favoring the storage of secure information behind encrypted cloud-based servers. This means loss of a physical object, including your smartphone, does not mean you’ve lost access to your money or sensitive documents. If that alone isn’t a compelling reason why you should use a mobile wallet, consider the sophistication of the biometric scanners available on most smart devices on the market today. From fingerprint scanners to dot-projection facial recognition technology, these authentication methods are extremely security hardened when it comes to deterring opportunistic fraud. 

This makes payments redeemed using your smartphone at point-of-sale significantly more secure than traditional card based methods like pin numbers, or the contactless chip that requires no authentication to redeem below a certain value threshold. Many platforms now offer their own software wallets and chances are you already have one available that you’re not utilising, as Google Pay and Apple Pay ship with all Android devices and iPhones respectively. Both of these have widespread acceptance among retailers, which removes some of the friction involved in switching to virtual payment methods. Other popular wallets include the relatively new service, Venmo, and the old guard of e-commerce, PayPal.

Finance Apps

Personal finance apps offer many features that make them a superior choice for the budget conscious over more traditional methods, including computer spreadsheets. This is due to the fact they are able to update and track spending in real time. Most offer the ability to link your bank account to the service, enabling financial activity to be reflected in the app automatically. They can function as a total overview of your personal finances with all your various accounts reflected together in one place. There are plenty of apps in the Apple and Play Stores that provide this service and you may need to try out a few before you find one that feels right for you.

They range from simpler products like Money Manager Expense & Budget, by developers Realbyte Inc., that offers a minimal looking but feature-rich ledger style experience aiming to furnish you with the most possible information in the simplest way, to more elaborate and dynamic offerings like the best-selling finance app, Emma. Emma uses algorithms derived from analyzing your spending habits to give you thoughtful prompts and advice that can help you with your budgeting and savings goals. What they all share in common is the ability to visualize your accounts and spending with rich charts and insightful data to clarify your income and expenses