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others are afraid to look.
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but we love problems.
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we create them and
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We fight gravity."
For this month’s Astro Intelligence blog post we’re opening up our wallets and putting money where our mouth is by taking a look at some emerging trends within the world of finance and money management. As with many of our previous posts, we’ll be looking at how the pandemic has shifted some trends or accelerated others that may have already been happening. As always our focus is on the end-user experience, so we’ll explore how this might impact us from a user-centric point of view.
“We’re witnessing the creative destruction of financial services, rearranging itself around the consumer. Who does this in the most relevant, exciting way using data and digital, wins!” – Arvind Sankaran, FinTech Advisor
‘Neo-Cash’ and Money Going Digital
Living in densely populated urban areas in Western nations it’s sometimes easy to forget that for many people in the world notions cashless payments and digital banking are still quite a novelty. In many developing parts of the world, users are only now gaining access to these new tools and methods for managing their finances and processing transactions.
In November of last year, Facebook-owned WhatsApp launched a new payments service through the United Payments Interface (UPI) for Indian consumers with the goal of providing up to 20 million users with open banking services through the app.
In Nigeria, where 40% of the population remains unbanked, fintech services are gaining trust by aligning new products with traditional financial structures (McKinsey, 2020). Moniepoint became Nigeria’s largest non-bank money service last year, processing up to 13 million transactions per month. The company provides 60,000 agents with debit card point-of-sale devices and app access, allowing them to offer ‘in-person’ ATM services for mixed cash-usage communities.
Pandemic Changes the Transaction
While cash payments may have already been on the decline, the pandemic only served to accelerate this trend, as many believe contactless payments (and hence cashless transactions) are much more hygienic and thus safer to process for both parties involved.
Over half (58%) of Americans intend to stop using cash completely after the pandemic (Travis Credit Union, 2020) and UK cash usage has dropped by 40% year-on-year during the crisis (Accenture, 2020), as consumers turn to touch-free payments,
Covid-19 has accelerated the adoption of IoT-enabled payments, allowing transactions to cut out interaction with potentially infected surfaces. A recent survey of global businesses found that 84% of IoT adopters felt this tech was a key factor in maintaining business continuity amid the coronavirus (Vodafone, 2020). Also, see Creating the Contactless Store and Towards Seamless Interfaces.
Banking Goes Green (finally)
Just as funding for climate-driven tech is growing significantly a new cast of disruptor brands aims to bring modern banking in line with consumers’ sustainability values. From decarbonizing crypto-currency mining practices to offsetting carbon emissions in-app, smart fintech players are both demonstrating and incentivizing ethical behavior from their end-users.
The latest launch from LA-based financial services company Aspiration is a ‘reforesting’ credit card that plants a tree (via a network of global partner charities) every time it’s used. After 60 transactions, enough trees will have been planted to offset the carbon emissions of an average American home (or so the brand claims).
Cryptocurrency often gets a bad ecological reputation owing to its extremely high energy consumption, particularly during the mining process. However, researchers and private firms collaborated in April to form the Crypto Climate Accord, whose goal is to fully decarbonize crypto by the year 2040. As digital assets become more integrated into the financial landscape, it’s important for industry stakeholders to address ecological and sustainability concerns.
“We’ve reached a turning point, with crypto gaining a permanent foothold in global finance. Now crypto is also taking a leading role to build a more sustainable and scalable future for global finance in the net-zero economy." — Jules Kortenhorst, CEO, Rocky Mountain Institute
Further Advances in Decentralized Finance (aka ‘DeFi’)
Spurred on by the most established and well-known decentralized ledger system of the blockchain, the past 18 months of the pandemic has seen a small boom in decentralized banking and financial platforms and institutions that exist outside of the mainstream, which have been gaining advocates -- and investment - rapidly. In May, UK challenger bank Revolut announced that customers can withdraw Bitcoin from its platform and add it to their personal wallets – a move helping to further integrate DeFi and crypto into mainstream financial portfolios. Cryptocurrency Compound offers direct involvement and democratization in the regulation of digital currency, allowing coin owners to vote on interest rates, technical changes, and platform protocol. The Compound token became the 25th most valuable cryptocurrency in June of last year, with its price surging to over $200 per token.
Decentralized finance is also moving into traditional banking products; earlier this year, Canadian fintech Mogo launched a Bitcoin cashback scheme for consumers refinancing or applying for a mortgage. Global banks currently have different approaches to crypto-rich consumers. As more people invest in non-traditional banking models, financial platforms will need to adjust their product offering to capture this spend
“At the end of the day, customer-centric fintech solutions are going to win.” – Giles Sutherland, Carta Worldwide