Ever checked your bank account on an app, or pinged someone a payment using Apple Pay or PayPal?
Then you are part of the fintech revolution.
Fintech, short for financial technology, has transformed the way we interact with our money, thanks to innovative start-up firms, changes in legislation – and the fact that so many of us now carry a powerful computer in our pocket in the guise of a phone.
Announcing new plans to boost the sector last month, he said that he wants to make it easier for these companies to list on the UK stock market and attract staff to the UK.
‘This is an incredibly important moment for the UK financial services sector,’ said Sunak.
‘If we can capture the momentum, the excitement and the extraordinary potential of the technological revolution that you are leading, we can make real our vision of this country as the pre-eminent financial centre in the world.’
Despite the Chancellor’s excitement, though, most of us have barely skimmed the surface of what fintech can do.
We might be comfortable checking our bank balances on an app, but letting third-party software into our private online spaces and allowing robots to make transactions on our behalf might seem a step too far.
Critics also say that the Fintech revolution doesn’t go far enough towards helping more vulnerable customers manage their money.
‘There is the potential for it to lead to plenty more options and apps with more bells and whistles, but will it genuinely promote inclusion for the UK’s 27million vulnerable customers who may not be well served by the financial services industry?’ asks Philippa Kelly, head of financial services at the Institute of Chartered accountants for England and Wales.
Used wisely, though, these services can save you money, help build up your pension or get you started with investing, and most of them are free.
Here’s how to get started.
Small steps in technology
Nicholas Heller, fintech expert and founder of new small business payment app Tomato Pay, suggests that starting with your banking app might be the most comfortable place for most of us to get involved with technology.
Many banking apps may have more functionality than you have realised, if you are just checking your balance and making payments.
HSBC, for example, has a tool called Balance After Bills, which allows customers to see their projected account balance after regular bills are taken into account.
Barclays allows you to review your spending in different areas and diarise your direct debits.
The next stage with fintech is understanding what is called Open Banking, which allows third party apps into your current account (with your permission and with strict security controls).
Apps that use Open Banking can see the transaction data on your bank accounts, and this allows you to see all of your money in one app, and also to allow technology businesses to make transactions on your behalf.
So-called ‘aggregator’ apps give you insights into what you are spending across all of your accounts and credit cards, and can make suggestions for better products for you or tell you to ditch subscriptions and other services which you aren’t using.
Other apps can go further, analysing your spending and then automatically moving money from your current account into savings, investments or even your mortgage.
The Open Banking website also allows you to check whether the app you are allowing into your finances is properly regulated, ensuring that you aren’t handing over your details to a fraudster.
You can check the app by name before downloading it and inputting your security details.
Fintech businesses are also democratising the process of investment, making it easy for new investors to start small and build up pensions or ISAs.
Wealthify and Nutmeg use algorithms to help you invest to match your risk tolerance, while Plum allows you to invest spare money or save it in a bank account.
Meanwhile, Moneybox uses Open Banking to allow you to invest your spare change at the end of a transaction, rounding up each one to the nearest pound and putting the extra to work.
Nigel Frith, financial analyst and broker, says Fintech has democratised the investment process. ‘In the old days if you wanted to invest you needed help from a financial advice guru, and that was pretty expensive,’ he says. ‘There was a lack of freedom.’
With freedom comes risk, of course, and it is important to understand how much of it you are taking on.
The Financial Conduct Authority website allows you to check whether the app you are using is regulated, while you should also understand that when investing the value of your money can go up as well as down.
Find A Lost Bank Account
Think you might have lost touch with one of your old bank accounts? You wouldn’t be alone.
New fintech Gretel estimates that 19.6million people in the UK have become disconnected from financial services products and that the unclaimed or dormant money in them is worth more than £50billion.
The app, which is soon to launch, will allow customers to input their details once and have old accounts found for them, and reclaim the money. It will also keep searching for accounts for users so that this does not happen again.
Duncan Stevens, chief executive officer of Gretel, says it is surprisingly easy to lose a bank account when a bank or building society changes name or is bought.
‘If it is an account you had already forgotten about, you may disregard communications from a brand you have never dealt with, and may not trust,’ he says.
Pay your mortgage off early
Jinesh Vohra’s app, Sprive, aims to save customers money on their biggest financial commitment, their mortgage.
Sprive allows customers to save money towards overpayments on their home loans, helping them to pay them off years early and saving thousands of pounds of interest. Sprive uses Open Banking technology to connect to your bank account and work out how much you can save each month.
It takes more in a month where you spend less on average and less if you do not. Each month, it prompts users to pay the money directly from the app into their linked mortgage account.
‘The average user is on course to save £32,000 in interest and to repay their mortgage eight years early,’ Jinesh says.
Most lenders allow customers to pay off at least 10% of their mortgage every year without penalty, but customers set their own limit with Sprive to ensure they don’t fall foul of lenders’ terms and conditions.
‘Mortgage overpayments really do make such a difference,’ says Jinesh, who was inspired to start the app after paying his own home loan off early.
Pay small businesses without fees
We all want to help local businesses in these difficult times, but the shift from card to cash payments has made life more expensive for them as they have to pay transaction fees.
Heller, of Tomato Pay, is aiming to make contactless payment cheaper for these companies with his app, which uses QR codes to help shoppers to transfer money to traders simply and cheaply.
‘We’ve all got familiar with QR codes in recent months because of the NHS app,’ he says. ‘This works in the same way.’
Learn to drive better – and make money
Telematics insurance policies are one of the best examples of fintech working in a customer’s favour, reckons financial expert Kevin Pratt, of Forbes Advisor UK.
Younger drivers, who might otherwise pay a four-figure sum for insurance, can save money by having a device in their car which assesses their driving and reports back to the insurance company.
‘If you are a safe driver, your premium is less,’ he explains. The app with many of these telematics insurance policies helps customers to understand their driving and gives tips on how to drive better.
Newer pay-as-you-go insurance policies are similarly tech heavy and allow infrequent drivers to pay a small subscription fee for annual insurance and then pay for the miles driven on top.
Clim8 is a new investment app that allows customers to invest sustainably from their mobile phones.
The app, which allows you to open a stocks and shares ISA and is planning to offer a Self Invested Personal Pension in the near future, uses active managers to pick stocks that they believe genuinely leave a positive impact on the planet.
The fund charges 0.6% of the value of your portfolio for this service, which is comparable to other similar services and far less than using a financial adviser.
Duncan Grierson, founder and chief executive officer, says the service is aimed at everyone, from small to large investors.
‘The exciting thing about fintech is its accessibility,’ he says. ‘Everyone has a smartphone and it really democratises investments. Five years ago you would have had to go to a wealth manager, but now fintech allows far more people to get access to this.’
If you want more tips and tricks on saving money, as well as chat about cash and alerts on deals and discounts, join our Facebook Group, Money Pot.
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