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Written by: Peter Mikoff
The modern world is built on the free flow of cash and undisrupted commerce. Unfortunately, over the last couple of years, we have seen countless issues and obstacles laid in front of both these critical business components. And keeping in mind that even the smallest hiccups in these areas can prove to have tremendous impacts on the future development of the financial world, one can only question the final outcomes of the COVID-19 pandemic, European crisis, and other issues we've been dealing with in recent period. Let's take a look then if we can come up with some viable answers.
The ongoing relevance of digital money
By this, we are not only talking about the cryptocurrencies like Bitcoin that, despite various challenges, have proved to be too big to fail and will make a critical part of the financial constellation in many years to come. We are talking about the fact that according to recent estimation, 92% of the world’s currency is digital. This fact should not only considerably speed up the financial world and usher in the extinction of tangible currencies, but also the expansion of a whole slew of new services like contactless payments but also challenges mostly tied to the funds’ security and processing of sensitive personal information.
Consumer expectations becoming more personalized
Of course, the final outcomes of this financial digital transformation will not stop at these couple of contained mentions. Binary language is gradually becoming the lingua franca of the modern society and the data the financial companies are gathering about their customers will become only one of the pieces of puzzles we will use to get to know our clients and tailor-made our products and services to their specific needs. The effects of this process will have a beneficial influence on the financial sector and financial institutions will have better insights into the habits of their clients than these persons themselves.
Long-term planning no longer the case
This doesn’t mean the people will simply stop worrying about the future altogether and start living in the moment. Long-term financial planning will remain an important part of our lives, but taught by the recent crisis people will start putting greater focus on solving immediate financial problems and keeping the level of long-term, high-interest debt at the bare minimum. If, for example, take a look at Australia, we will see an opportunity for a loan from Jacaranda Finance aimed at solving smaller-scale personal loan issues. This type of business model will become even more relevant in the future.
The rise of digital apps and services
In one of the previous sections, we have briefly mentioned that the rise of digital money will lead to an entire slew of new financial apps and services. Now, we would like to elaborate on this fact and point out that various `financial service providers like PayPal and Venmo have, back in 2020, processed $159 billion in payments which represents a 59% year-on-year increase. These numbers do not include the services like digital wallets, “smile to pay” services, and so on. The development of these apps, services, and platforms will, in itself, become a very relevant financial factor and create millions of new jobs.
New financial circumstances lead to new financial concerns
Last but not least, we would like to point out that all the developments we have listed above and the changing dynamics of the financial world will lead to a rise of entirely new issues and financial concerns we haven’t given too much attention to only a couple of years ago. Some of the most noteworthy mentions come in the form of democratization of public markets, blurring of the border between these financial sectors, increased concerns regarding data security, and changing roles of the financial firms. Taking note of these developments presents the only way of navigating the financial landscape of tomorrow.
So, there you have it – the five most important trends and predictions that should help us make an educated guess about the direction in which the financial world will be heading in future years. Of course, these couple of mentions make only the tip of the iceberg, and keeping in mind the state in which the world finds itself at this very moment, even these assumptions are not set in stone. But they do provide us with a more than welcome peek behind the curtain, which is more than enough to make some prudent financial decisions.