Although technology has provided us a higher sense of control over our financial lives — internet shopping, internet banking, electronic wallets, automated transactions, to mention but a few, however, it has also changed the way we perceive and value money.
Increasing evidence suggests that technology affects the decision-making process, and could have some negative real impact if combined with deep-rooted financial behaviours and behavioural distortions.
People are beginning in the early stages with the financial attitudes and subsequent financial habits, such as budgeting or stimulus shopping. Over time lessons from other influences, such as schools and social networks, further form money attitudes.
Technology can help us make financial choices, but a trusted consultant is critical in helping customers become aware of their preferences and understand when their emotions start.
Below are 4 ways technology is influencing how we value money:
1. Technology as a negative financial influencer
In the digital environment, today people also have a larger network of possible social factors than before. However, there are positive or negative impacts.
Below are a few ways tech is negatively impacting financial ideas:
- Easy e-commerce (free delivery, free return) including AI technologies suggesting “you might like” other goods could lead to the further impetus for immediate satisfaction.
- Constant dependence on information and data from blogs and social media. Information sorted through this method might seem to be unreliable resulting in a bad investment of time and money.
- Platforms tribalism – individuals tend to be too confident in their belief system. Thereby, gravitating constantly to their preferred kind of information and analysis. This in turn affects financial behaviours.
2. Technology and the value of money
Increased mobile payment has a positive and negative effect. For UK mobile commerce in 2015, online transactions accounted for 11%, up from 7% in 2013. It changes how people value financial tools. The more people are excluded, the fewer people will consider how much they save and consume.
More than half, (57%) of UK residents have savings accounts of less than €1,000 and more than a quarter have deposited nothing. In total, tech does not improve how individuals save, rather it improves spending.
3. Technology as a positive investment influencer
Electronic money applications such as PayPal and Cash App simplify and facilitate transactions. Below are several other ways in which tech simplifies the financial lives of consumers:
- The automatic registration of payroll accounts in pension plans contributed to the fight against people’s inclination towards savings for the future and their inertia in investment choices.
- Some several websites and applications help people build budgets, monitor their expenses, and save cash. Budgeting applications in specific may help individuals resolve the “surprise” bias that leads to data that is easily accessible, such as stock past performance, and ignores certain information.
4. Technology innovations on financial tools
Fintech companies are creating innovative ways to improve financial tools and make digital transactions cheap, reliable, quick, and hitch-free across borders. There are various financial tools available for people to explore. Innovations like cryptocurrency have improved transactions across different borders and reduced financial boundaries between online users. This has increased the value for money, as some cryptos are worth over €49,000.
Technological development is central to the endeavours to best represent consumers through the managing customer experience. Consequently, it is vital for financial services companies to adopt modern banking technologies in order to prosper.