Are we moving towards a cashless society?
The financial services industry has undergone a significant shift in the last ten years, largely due to advancements in technology.
Twenty years ago there was no such thing as internet banking, chip cards or pay wave. Even something as simple as transferring or withdrawing funds required a physical trip to an ATM or bank branch. How the times have changed.
Nowadays, consumers hold everything in the palm of their hands. Money management, budgets, banking, business, communication and leisure have all come together under the umbrella of a ‘smart phone’. Undoubtedly, this small device has caused great disruption.
Not only has digital technology made life considerably easier it’s brought about significant societal change. From a financial perspective, it has shifted us from a reliance on physical to digital currencies.
In fact, The Reserve Bank of Australia (RBA) announced earlier this year that digital payment technologies are now being used for purchases more than cash, with ATM use and withdrawals reaching their lowest levels in 15 years.
The report also revealed that Australia has the highest use of contactless payments of the countries surveyed. This change has given rise to a new industry which has been booming since its inception – the FinTech sector.
The rise of this industry has created a flurry of FinTech start-ups that aim to improve how consumers spend and manage their money.
The most recent, and revolutionary, tech businesses are based on digital payment methods and include technologies such as Apple Pay, pay wave, Pay Pal, Samsung Pay and many more.
But, when it comes to money management for consumers, mobile apps lead the way. There are now many apps which monitor an individual’s bank accounts, investments, superannuation and debts.
In my time as a media presenter I’ve interviewed the founders of FinTech companies such as Pocketbook and Money Brilliant. Both of these apps track a user’s spending habits by linking to a nominated bank account to provide insights and suggestions.
What’s great about money management apps like these is that all your financial information is in one place. Your spending is broken down into categories like food, bills and transport so you can see exactly where your money goes.
So if digital technology is helping us to monitor the way we spend and save what about investing?
Putting that small change to good use
According to The Royal Australian Mint’s chief executive, Ross MacDiarmid, Australians lose $100 million coins every year (2014). Imagine if you could put that spare change to good use!
Over the years I’ve thought to myself, ‘wouldn’t it be great if there was a technology that could help you put away that spare change – without all the hassle’.
It wasn’t until I interviewed the Australian CEO of Acorns, George Lucas that I realised this already exists!
Acorns – an app like no other
Unlike other money management apps, Acorns links up to your bank account but instead of just monitoring your transactions it actually invests small but manageable amounts on your behalf.
[The Acorns app] is like throwing all those lose coins into a jar, but it does it in the digital sense.
If you spend $2.50 on a coffee or $30.50 when you fill up your car that extra 50 cents will be rounded up and invested into your Acorns account”, said George.
While it is an investing app, the premise behind the idea is to get consumers to realise that saving is actually possible and that every little bit really does count.
“Normally you’d need a few thousand dollars either to buy a unit trust or to open a brokerage account. But Acorns is a micro investing app, which means from as little as $5 you can get fully invested in the market – which is not the normal way.”
George says digital payment technologies are radicalising the financial landscape for everyday individuals.
People get a financial literacy course hands-on because not only are they learning how easy it can be to save but they’re also learning how markets work and how the news affects this”, said George.
But a big part of Acorn’s appeal is its simplicity – taking the onus of saving and investing off the individual.
“It’s very simple to use and very easy to set up. It’s all online so there’s no paper to be used, you can sign up through the app on your phone or through a portal on the website. You just fill out the form and off it goes.
The cost is $1.25 per month which is about $15 per year and that includes everything. Plus there’s no penalty to take money out”, he said.
Acorns launched in Australia early last year and, in its first three weeks, experienced more than 50,000 local sign-ups. This rapid growth is reflective of the times and the demand for such businesses.
In terms of investing and managing your money this app is simply fantastic but, it’s really just one piece of a much larger picture. Our society, as a whole, is increasingly becoming digitalised. The way we work, shop, communicate and search for companionship can all be done online.
So, are we moving towards a completely cashless society? It may be too soon to tell but the signs are definitely there!
To find out more or sign up to Acorns visit here
Listen to the full interview below.