It’s never too late to get your personal finances in order, especially with the uncertainty of the economy.
These days, managing and tracking your finances is easier than ever, thanks to advancements in financial technology (fintech).
Fintech has reshaped the way people manage and invest their money. Not only that, it provides real-time tracking that supports a more strategic and informed approach to financial planning. Savvy fintech users can make better decisions, which ultimately saves them more money while simultaneously earning more on investments.
The concept of data-as-a-service (DaaS) is leading the way in this new era of financial technology and services. By giving financial platforms access to accurate, up-to-date information that’s easily accessible from multiple devices and accounts, people can wield them to effectively manage their finances.
Let’s take a look at how embracing data and technology can enhance your personal financial journey.
The Power of DaaS in Personal Finance
Data-as-a-service is a cloud-based network that stores and organizes information and data. Everything from text documents to photos and videos is stored on the network and accessible from multiple applications and devices. Many DaaS platforms also offer services such as analytics, integration, and data processing for a seamless experience.
From a consumer’s perspective, financial applications that invest in DaaS provide a one-stop solution for financial planning. Instead of using multiple platforms and services to manage your finances, having one primary platform to house your information makes it much easier to track your financial activity.
Fintech providers also benefit from using DaaS as it helps streamline their workflows and processes and upgrade the functionality they’re able to provide you.
Managing an in-house data management team requires time, staff, and money. Like other “as-a-service” systems, DaaS typically offers subscription-based services that allow companies to scale up or down depending on their needs. With this model, businesses only pay for what they need and reduce expenses.
Accessibility of Financial Data
One of the most promising features of DaaS is how it transforms the accessibility of information.
If you take a look at traditional banking and financial services, people often need to go into a branch, or at least contact one, to review their accounts and get help making financial decisions. Whether you’re applying for a loan, selling off stocks, or learning about investment opportunities, you can’t always get access to the information you need to do that on your own.
Having access to financial information means consumers are better educated and prepared to make informed decisions based on the insight available to them. Fintech applications and services have changed the way people interact with and think about their money, and their financial institutions. It all comes down to having the ability and financial autonomy necessary to retain control over your personal finances.
Financial Planning Software Supports Better Decision-Making
For many people, personal finance is an overwhelming and often scary thing to think about, let alone strategize and plan for. Much of the fear surrounding financial planning comes from a lack of knowledge to feel confident enough to make important decisions. The good news is that fintech software makes navigating financial planning much easier.
Over 3 billion people use fintech apps or platforms. Financial planning software features different tools like budget tracking and account aggregation to allow users a bird’s eye view of all their finances and net worth in one place. The more information available and accessible to users, the better prepared they are to manage their finances effectively.
Here are a few ways that financial planning software lends itself to empowering users to make better financial decisions.
- Expense Tracking and Budgeting: Knowing how much money is coming in and going out is the baseline for improving your finances. Fintech software can help people create budgets based on their income and manage expenses month to month. Financial planning software incorporates automated tools to categorize expenses, analyze spending habits, and anticipate upcoming payments.
- Retirement Planning: Saving money for retirement is an important financial goal. Whether or not you have an employee-sponsored 401(k) or an individual retirement account (IRA), planning for the future is key to maintaining personal wealth long after you stop working.
- Tax Planning: If you own property, you want to pay attention to any property taxes you may owe come tax season. Some fintech software provides insight and information on changes to tax laws or regulations that you may be unaware of. Receiving updates on these laws allows you to plan ahead and avoid any surprise payments once you file your taxes.
- Investment Tracking: The fluctuation in the economy doesn’t only affect your spending power, it can impact your investments, too. Stocks, bonds, and mutual funds are three common investment types that should be monitored regularly to track performance. Financial planning apps and investment platforms help individuals make the best investment decisions.
- Monitoring Credit: Your credit score can influence your ability to take out a loan, impact insurance payments, and determine home mortgage rates. Credit monitoring services allow people to regularly check reports and learn about ways they can improve their scores. Bumping up your credit score won’t happen overnight, but for anyone with big financial goals, having a good credit score will directly impact other areas of your financial planning.
Consider Fintech in Your Financial Advisory Decisions
Although fintech platforms and services allow consumers to handle their finances, there’s still a need for financial advisors and their expertise — especially among high-net-worth individuals or those who want to make the financial moves that will get them there.
In these cases, it’s wise to look out for advisors who are adapted to new technology to provide clients with the best service. As the landscape of financial advisory services continues to change, they must choose financial advisor software that offers a holistic overview of client finances so they can provide informed advice.
Data aggregation is still a key feature to keep in mind here. The ability to gather information from other sources into one platform is a clean and tidy way of keeping all the necessary data in one central location. It’s also much easier to analyze financial data and recognize patterns when working out of one platform.
Depending on your goals, you also want to make sure your financial advisor is working with tools that help assess risk and minimize loss, boost retirement savings, and conduct estate planning. Automation features can help distribute funds to specific accounts, set budget caps, and track trends in investments and spending. Bonus points if their fintech apps of choice make it easy for you to interact and collaborate alongside them during your financial growth journey.
The Future of Technology in Personal Finance
Emerging technologies are constantly reshaping how people approach personal finance. With advancements in artificial intelligence (AI) in personal finance, consumers are more likely to make informed decisions regarding their finances, which is the primary factor in improving personal wealth.
This aligns with an emerging level of trust consumers have in AI. In a study conducted by Oracle, 67% of consumers have more trust in a robot to manage their finances than a human. This further supports the demand consumers have for technology to help manage their finances.
There are a few challenges with technology in personal finance that its developers should continue striving to overcome, such as data privacy and protection. Fintech companies must enforce security policies and procedures to prevent and weaken the impact of cyberattacks or breaches. Companies also need to be aware of ethical considerations like biases and discrimination during the developmental stages.
Take Control of Your Personal Finances
For the everyday consumer who wants to take control of their finances, using technology — or partnering with an advisor who does — that integrates accurate, accessible data can put them in the driver’s seat of their financial future.
For more free and thoughtful advice on financial decision-making, stay tuned to our blog or engage one of our loan calculators.
