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The global personal finance software market is expected to reach $1.8 billion by 2030, an increase of nearly $1 billion since 2019.
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And for good reason.
Financial services have gone from being primarily dominated by Wall Street to an industry where anyone can control their finances.
From budgeting apps to family banking solutions, the personal finance industry has opened its doors to the everyday consumer.
This revolutionary open-door approach has brought an influx of creative change to the marketplace – and more business opportunities.
Let’s explore seven recent changes in personal finance management and what they mean for businesses today.
Contents To display
1. What is personal finance management?
2. What’s new in managing personal finances?
2.1. Family banking solutions
2.2. Financial education services
2.3. Savings solutions
2.4. Portable spending technology
2.5. Virtual banking services
2.6. Budgeting apps
2.7. More accessible investment options
3. What do the changes in personal finance management mean for businesses?
What is personal finance management?
Personal Financial Management (PFM) refers to the software that powers various personal finance and mobile banking tools.
While PFM once focused primarily on decluttering and simplifying bill paying, today it prioritizes creative personal finance solutions.
Take Paypal Holdings Inc (NASDAQ:PYPL), for example.
PayPal was founded on the principle of fast and easy digital payments for consumers and businesses. But the company has become much more than a digital payment platform.
Today, PayPal offers a host of creative solutions, including cryptocurrency trading, international cash pickup, loyalty cards, and more.
Let’s take a look at some other developments in the personal finance management industry.
What’s new in personal finance management?
The following seven changes will continue to make waves in personal finance management.
Family banking solutions
The family bank emerged after customers demanded solutions that allow children to take the initiative with their money, with the help of their parents.
With more apps, kid-friendly banking options, and budgeting tools than ever before, families wanting to teach their kids about money management can do so with just a few clicks.
As a result, solutions such as child debit cards, virtual banking for children, and digital savings goals have taken shape.
Parents and children can use family banking solutions to:
- Assign virtual allocations
- Allocate funds to savings goals
- Set savings goals
- Monitor past transactions
- Automate future filings
- Attend virtual classes on budgeting and money management
Financial education services
Financial education services have sprung up to help consumers struggling with debt management, budget challenges and investment issues.
Popular solutions include online courses, monthly subscriptions to securities advisors, and one-on-one sessions with virtual financial advisors.
Take The Motley Fool, for example.
It offers a monthly subscription program for stock advisors with the aim of making stock investing more accessible. Customers who sign up for the subscription service get access to a monthly title selection service, solid educational resources, webinars and new content.
From improving their math skills through in-app courses to learning all about microinvesting through online courses, people can take advantage of financial education services to improve their financial health.
Millennials have become more financially and digitally aware, with 95% confirming that they search the internet for coupons before making an online transaction.
To meet the high demand for cost-saving options, companies are increasingly creating ways to help customers save money when shopping.
Here are some examples of popular savings solutions on the market today:
- Coupon directories: A complete list of current offers, coupons and discount codes
- VIP programs: Programs offering bonuses and monthly savings to loyal customers
- Rewards programs: Programs that allow customers to earn rewards, gifts, and discounts after reaching specific spending milestones
- Cash Back Programs: Programs that reward customers with a certain percentage of cash back with every purchase they make
- Points, miles and account credits: Solutions that help customers earn points, miles and credits based on specific spending habits
Portable spending technology
It’s no secret that wearables have exploded into health and fitness, but did you know that banks have also embraced this technology?
After researching unique ways to adopt technology for their customers, banks discovered a revolutionary concept. Enter portable expenses.
Wearable spending means using physical devices with built-in payment sensors to make purchases.
Banks have integrated sensors into several devices, including key fobs, smartwatches, fitness trackers and even smart jewelry.
Virtual banking services
Virtual banking, not to be confused with online banking, refers to accessing banks and their functions online – without ever setting foot in a physical office.
Although virtual and online banking seem to be the same thing, the difference lies in which banks handle the two processes. Virtual banks operate entirely online, and traditional banks have both physical banking locations and online access.
Take banking options for students, for example. Banks specializing in family and young adult products tend to host their institutions online. International banks created for nomads, expatriates and travelers also tend to host their institutions online.
Virtual banks will remain popular as consumers seek more cost-effective banking solutions. With products like no-fee checking accounts, higher-interest savings accounts, and mobile payment platforms, the world will continue to see an influx of virtual banking.
Budgeting apps have sprung up to help the millions of Americans who live paycheck to paycheck take control of their finances.
While traditional budgeting has a bad reputation for being boring or restrictive, apps have stepped up to make budgeting fun and effective.
From creating an automated household spending plan to using AI to track expenses, budgeting apps are more user-friendly than ever. In fact, one study found that users of budgeting apps typically reduce their spending on “restaurants and beverages” categories by 31% in their first seven months.
More accessible investment options
Based on our Wall Street commentary, investing is no longer just for VIPs. Nowadays, anyone can invest in the stock market or in the cryptocurrency industry without having to deposit bags of cash.
The key to this breakthrough is what is known as micro-investing or fractional shares – sometimes also referred to as sliced shares or small size investments.
Microinvesting involves buying small chunks of a stock or cryptocurrency rather than buying the stock or currency in its entirety. So instead of buying a share of Netflix, you can buy a quarter share. Instead of buying one bitcoin, you can buy ten fractions of a bitcoin.
While tech companies ushered in the microinvestment trend, big players like Charles Schwab and Fidelity are also embracing the practice.
What do the changes in personal finance management mean for businesses?
Changes in the management of personal finances mean that companies must look for creative ways to meet the ever-changing financial demands of customers.
For example, accepting traditional payment methods like cash, credit, and debit may have worked in the past. But now customers are demanding a wider range of payment methods.
To meet customer demands, companies will need to first examine the financial products and methods that their customers value most, and then look for ways to integrate these products and methods into their business models.
For example, if your customers appreciate the changes we’ve listed today, you might consider:
- Accept a wider variety of payment methods to attract customers with mobile wallets, cryptocurrencies, portable spending and family payments
- Create rewards programs that help retain repeat customers
- Collaborate with virtual banks or budgeting apps to offer services, products or pay for in-app advertisements
- Offer offers, coupons, points or cash back to satisfy customers who value cost savings
With the global personal finance software market expected to reach $1.8 billion by 2030, anyone looking to jump on the bandwagon should start considering it now.
Consumers looking to take control of their financial health can do so using the seven changes we’ve covered today.
Companies looking to take advantage of these changes should keep an eye on the industry and look for creative ways to adopt the technologies that customers need most.
Updated on February 18, 2022 at 4:06 p.m.