As consumers become more and more interconnected socially and professionally, our world has entered an era of growing financial inter-connectivity and expanded service. Financial services, such as insurance providers and banks, are thinking of new ways to incorporate modern technological advancements into standard practices. This will create an increasingly user-friendly financial experience for consumers and businesses alike. According to a recent article on ABC News, these are a few growing trends in the financial sector to look out for:
1. Non-traditional partnerships, for example between credit card companies and online retailers. Credit card providers are trying out new partnerships in order to attract consumers and provide them with expanded benefits and services, even if these offers are outside the standard financial realm.
2. More widely available perks. Typically banks target low-risk, big-spending customers in order to minimize risk. More recently, banks are offering great perks and once-exclusive services to a wider base of borrowers at a lower cost. This trend is expected to continue during the coming year.
3. Expanded credit scoring methods. Credit scores have always been an issue of contention for people who have not built up credit but are still perfectly able and willing to pay their bills on time. These people tend to get the short end of the stick when is comes to credit scores and ratings and the financial services involved with these ratings. However, is it expected that credit rating agencies will expand the criteria in their formulas to be friendlier to people with no credit.
4. Longer periods of 0% interest on cards. The average length of a promotional 0 percent APR period rose from eight months in 2010 to 11 months in December. The period will continue to grow as bank’s shake off the results of the financial crisis and begin to attract customers with existing debt.
5. Alternative lending is on the rise. Small, recently-launched businesses looking for loans have encountered trouble at banks because of their lack of financial history. This has resulted in the growth of lenders willing to overlook financial history in favor of other factors, such as shipping records and social media activity.
6. Banks are taking steps to educate customers. National banks, such as Bank of America and PNC, are offering great financial education programs to customers, in order to strengthen their brand and gain consumer trust. These new tools, if utilized fully, could mean great things for the future financial stability of average Americans.
7. Life insurance will become more accessible. As the world becomes increasingly modern and “plugged-in,” life insurance providers are looking at new ways to meet the needs of consumers. This includes becoming more web- and mobile-friendly and reaching out through new channels, such as national retailers, to broaden their customer base.
8. Brokerage firms will incorporate new social features. Many people, especially younger people, are timid when it comes to investing because they lack the knowledge necessary to make smart investment decisions. Since the younger generation is so involved in publicizing their lives through online sharing and social media, many brokerage firms are expanding their features to include these types of services. Several online brokers allow users to share investment ideas and view other users’ trade history in order to make investment decisions. The number of firms that boast these services is expected to grow over the next few years.
For more information, read this ABC News’ business article