Posted on Sep 24, 2018
From contactless payment to electronic wallets, the way we interact with money has undergone a massive change compared to how things were, as recent as 5 years ago.
Much of this can be attributed to the rise of financial technology – or FinTech for short – and the startups leveraging it to transform traditional business models.
In this article, we highlight 5 ways FinTech has changed our everyday lives, making it easier for us to track, manage and invest our personal finances.
1. A bank in your pocket
Like many things we do these days, banking has become a something we do mostly through our smartphone or desktop PC. This is why most banks now offer its customers several ways to carry out common bank transactions without having to visit a local branch.
Such channels include mobile apps, websites, and phone banking. Having these digital channels frees up the need for banks to maintain an extensive bank network. Any cost savings gained are then passed on to customers who enjoy limited fees, and low or no minimum account balances.
The adoption of FinTech by banks looks set to facilitate even more innovative ways of engaging customers. For instance, POSB customers can now check their balances, ask for current foreign exchange rates, and pay bills through the POSB digibank Virtual Assistant on Facebook Messenger.
Even public agencies such as the CPF Board are exploring how FinTech can improve services provided to citizens. For example, to provide more convenience to CPF members who are 55 years old and above, they can now receive their lump sum withdrawals via PayNow, which enables funds to be transferred on the same day rather than the current turnaround time of 5 working days.
2. Tap to pay
FinTech is making possible a world where payments are increasingly mobile, digital, and even borderless. You only have to look at your nearest shopping mall to see how people are using contactless or digital payment services like PayWave to pay for their purchases.
Many are also embracing mobile payment platforms such as ApplePay and Android Pay, which allow users to digitise the information stored in their credit cards and make payments using just their smartphones.
Aside from the seamless convenience these payment methods bring, they also provide consumers with an easy way to track their expenses and encourage more prudent spending in line with their desired financial goals.
3. New kid on the block(chain)
In simple terms, blockchain is a public ledger where transactions are recorded and confirmed anonymously. Once information is entered into the ledger, it cannot be altered. This unique attribute creates a framework for building secure applications that minimises chances of fraud.
For now, blockchain is primarily used as the infrastructure behind cryptocurrencies such as Bitcoin and Ethereum. While these have yet to catch on with the mainstream, many financial institutions are working with blockchain developers to fully understand the revolutionary potential of the technology.
Locally, the Monetary Authority of Singapore is working with a consortium of banks and technology companies to explore ways to apply blockchain technology to conduct inter-bank payments in Singapore.
4. Lend a helping hand
The role of the bank has traditionally been to act as an intermediary between two parties in a financial transaction – the client with extra savings and the customer seeking a loan.
Peer-to-Peer (P2P) lending platforms such as Funding Societies and Moolah Sense provide an alternative to banks by connecting both parties directly with the aim of reducing borrowing costs and processing time.
Such an avenue for funding would appeal to budding entrepreneurs who do not meet the criteria to obtain a bank loan. As with any financial product, borrowers or investors of such platforms should do their due diligence and access its effects on their financial situation before agreeing to take or provide a loan.
Robo-advisors have proven a boon for potential investors who lack the time, knowledge or desire to constantly monitor their investments. Companies such as Stashaway, Autowealth and Smartly offer an easy set-up, low fees, and customisable investment strategies based on an investor’s profile.
These robo-advisors will then help investors monitor the markets and automatically optimise investments to manage risk and maximise returns. However, investors must be mindful that like any other financial investment, positive returns are not guaranteed.
The CPF Board recently introduced a new digital tool, CPF Retirement Planning Service (CRPS) Online for CPF members who are 54 years old. The service, which helps members who are reaching 55 make informed decisions about their CPF savings, was only available at CPF service centres previously.
Instead of a face-to-face session at the CPF service centre, members are now able to check their projected Retirement Account (RA) balances, estimated payouts, amounts they can withdraw and even view their very own retirement dashboard on an infographics personalised with their CPF information anytime, anywhere.
Easier access to funds, loan opportunities, payment options and financial advice are just a few examples of how FinTech is driving financial institutions to evolve and better serve our needs.
These new and innovative ideas will continue to change the way we manage our personal finances and provide greater convenience to all of us.
Note: CPF Board is not affiliated or associated with any of these third party services and does not endorse any of those mentioned services or any of its subsidiaries or its affiliates.