The upheaval of the past two years has impacted on pretty much every facet of our lives, and banking, like many other sectors, has seen plenty of change. 

Special Report

The Future of Money

From blockchain and bitcoin to NFTs and the metaverse, how fintech innovation is changing the future of money.

"We're in a solid 21 months of modified behavior," says Darryl Knopp, senior director of portfolio marketing for FICO. Before the pandemic, banking was primarily an in-person activity, with digital services supporting customers' needs, he notes. "We've now moved past the point where digital is at the center of banking and face-to-face interactions support digital," he said.

"We're seeing vast improvements in not just the experiences, but in the actual products and services that are being offered that previously were 'ignored,'" Knopp says, noting that advances have been made in banking online for mortgages, credit card loans, savings accounts and traditional core bank products. "Most financial institutions have wrapped their heads around how to do that," he added.

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Knopp sees personalization and humanization as two key qualities that will drive innovations in financial services from now on. 

"Personalization in the sense that now that I'm consuming a lot of this data I can actually start talking to people and talk to them like they are them, and I know more about them, I can actually make recommendations that are unique to them. It's this idea of marketing to one -that's personalization, and we're getting better at it," he said.

Humanization concerns finding ways to connect with people that are meaningful to them and to have experiences that are intuitive and positive. Knopp points to Lemonade Insurance as an example of a company that incorporates that humanized element.

"It's the little things like humanizing the onboarding experience and when I go into the app it tells me 'Good Morning, Darryl!" he says. 

Something as simple as ending a greeting with an exclamation point can make a big difference to the user experience. "That exclamation mark is one of the smartest things Lemonade did, because they're excited to see me; that exclamation mark is the digital equivalent of a smile. So, I think we're going to start to see more brands switch to that," Knopp says. 

Macro trends

Meanwhile, The COVID-19 pandemic has also forced a wider group of consumers and retail businesses to migrate to digital environments, making consumers smarter in their shopping habits while not having to set foot inside a store. 

"Businesses are doing it because they can't open up shop and consumers are doing it because they can't physically go where they used to go, and that's what's creating this permanence in the 'smarter' evolution of consumption," says Bricklin Dwyer, chief economist at Mastercard. "It's really enabled by the underpinning of cloud-computing technology and a lot of capabilities that are out there and you can imagine starting a new business during an economic crisis seems like a terrible idea, except during this type of episode where consumption is being shifted so dramatically where you can capture new markets that didn't exist before," Dwyer told ZDNet.

Dwyer notes that the recent shopping phenomena of buy now, pay later (BNPL), buy-online-pay-in-store (BOPIS) and even buy-online-return-in-store (BORIS) is much easier for consumers. "That simplicity really ends up being a key element," Dwyer said.

Mastercard's annual economic report, Economy 2022, which Dwyer wrote, looks at five factors Mastercard believes will continue to shape the global economy: savings and spending, supply chains, digital acceleration, global travel, and economic risks. 

• Consumer spending of savings accumulated during the pandemic could help to add three percentage points to global GDP growth in 2022-Households' savings rates increased significantly in 2021, nearly twice as much as pre-pandemic due to people sheltering in place due to the COVID-19 pandemic. How fast or slow consumers spend their savings is anyone's guess, but it will have a ripple effect on the global economy. If, for example, savings are spent faster, it could boost global GDP by 4.5 percentage points. But Mastercard expects to see economic growth slow in 2022 compared to 2021 as government stimulus dwindles and inflation rises, particularly in advanced economies.
• The shift of household spending from services to goods will shift back in 2022 from goods to services-As a result of increased consumer savings and decrease mobility, a 'massive' 27-year reversal in the shift to services occurred. The pandemic shuttered much of the services industry -including restaurants, salons and taxis -sending the share of goods spending from 39% to about 47% at its peak, ruining the services industry and simultaneously burdening the supply chain. Mastercard believes that the balance will normalize in 2022 as borders open and services are sought again.
• The digital economy is here to stay with 20% of the digital shift in retail to remain the same in 2022-Mastercard discovered a growing trend: the rise of e-commerce subscriptions, such as wine clubs, weekly grocery delivery and clothing. Close to 88% of countries across 32 markets saw a rise in subscription services in 2021 versus 2020. Car companies, virtual workout partners, bike rentals and pet services were among businesses getting into subscription services, Mastercard concluded. Cloud-based services, which make payment transactions seamless, can be credited for helping the subscription economy's growth. The result: more business and consumer interest.
• Leisure travel will recover in 2022 as international travel opens up; medium- and long-haul flights will take off in 2022-Mastercard saw a rebound in domestic and short-haul travel (less than 600 miles), while medium-haul travel (600 to 1,800 miles) continues to be lifted by fewer travel restrictions, and long-term travel still behind. Mastercard expects governments throughout the world to enforce more focused security measures, such as mandating vaccines, instead of broad closures of key travel corridors.
• Risks of various kinds will threaten to disrupt the global economy in 2022-New COVID-19 variants, such as Omicron, are expected to be the biggest risk in 2022, but Mastercard said it believes there are close to a dozen other factors that could cripple recovery, including a sharp recalibration of housing prices that have appreciated more than 66% in the past two years, a surge in oil prices, fiscal cliffs in advanced economies, and international tariff wars.

How this all affects the future of money is evident: the economy is steadily shifting to a digital-first footing and businesses that adopt digital capabilities are poised to flourish, aided by increasing consumer demand and spending power, especially as we emerge out of the COVID pandemic.

New FinTechs that are helping to shape the future of money

Despite the continuing stresses and constraints of today's economy, the future of money -and the way we manage it -continues to evolve at a rapid rate. FinTech companies today are paving the way for more diverse financial products to come to market faster while introducing new financial opportunities to a wider variety of consumers. Traditional financial service companies, however, will be forced to compete harder with newer, leaner and more technically agile fintech firms that are offering their services directly to consumers. Competition will be intense, but so will the innovations that come from it. 

"The future of finance belongs to any company that recognizes the opportunity to fuse products and services that deliver added value to customers," says Melbourne O'Banion, CEO of Bestow, a life insurance FinTech firm based in Dallas, Texas.

The following FinTech firms, while only just a handful, are emblematic of how technology innovation is shaping the future of money across a variety of financial services.

Versapay -Accounts receivable

In its quest to rid companies of paper checks, Toronto-based Versapay has developed one of the first collaborative accounts receivable platforms, combining advanced invoicing, automation and payments technology to deliver improvements and efficiencies for its 250,000 business clients. It has grown quickly during the pandemic, which fuelled a demand for digital payments including the digitizing of accounts receivable services. Versapay CEO Craig O'Neill told ZDNet that a large majority of finance leaders will adopt digitized payments in the next few years. "Surveys show that as many as 93% of finance leaders are saying they're going to digitize how they do business on both the accounts payable and accounts receivable side. There's going to be a sea change over the next couple of years, which will really change the face of business: paper checks will go away, paper goes away completely and will set people free to work wherever they want," he said.  

BestEgg -Personal lending and financial management resources

This Wilmington, Del.-based FinTech is on a mission to help people feel more confident about their everyday finances by making money accessible through fast, simple and easy personal loans. BestEgg has created a proprietary AI platform to deliver digital products including loans for debt consolidation, credit card refinancing, home improvement, moving, vacation and baby adoption. BestEgg recently introduced an online financial health platform to bolster confidence for consumers in the wake of the COVID-19 pandemic, which has had a debilitating effect on many peoples' finances. "The future of digital finance is human," says Sabrina DeVito, chief strategy officer for Marlette Holdings, which operates BestEgg. "Digital can come across as cold...but the winners are going be those who use digital to create extraordinary experiences but also are human in how they come across. Understanding consumers and connecting with consumers on a human level is part of it," she said.

Bestow -Life insurance

Fast-term life insurance is the name of the game for this Fintech, which claims that you can get approved for life insurance in 10 minutes. No need to go to a doctor's office for a checkup; Bestow accesses available personal data, with your permission, and uses algorithms to determine qualification and establishes a price. "We've taken something that's always been an analog, offline, manual process and made it simple, easy and intuitive for a customer to buy life insurance like any other good or service online," says CEO O'Banion. "Our overall mission is very bold: Make life insurance accessible to millions of underserved families."

Kabbage -Small business financing

Small businesses took a beating during the coronavirus pandemic -large numbers shut down permanently, crippling local communities both economically and socially. Fortunately, more small businesses are forming in the shadow of the pandemic, and one FinTech is helping to make that possible. Kabbage, backed by American Express, is a one-stop FinTech resource for small businesses, providing access to cash flow solutions such as business checking, flexible funding and payment processing services. It recently launched Kabbage Funding, which provides flexible lines of credit between$1,000 and$150,000, and Kabbage Checking for online business checking accounts.

"We saw a technology opportunity; a way to use an API to automate serving a business that couldn't have been served previously," said Kathryn Petralia, co-founder of Kabbage. Petralia says what she's seeing with small businesses is that there's more support by many other companies to serve these unserved small businesses. "They're a vital part of the economy -a vital part of job growth and so now we can do that using technology where we couldn't do it before because it was always hard to market to small business and to serve them as they're more volatile and vulnerable. But thanks to the data and these new technology platforms, we can do it," Petralia said.

UpTip -Cashless tipping

This new startup is designed to replace cash tipping with an e-payment platform and enables users to provide ratings on service providers such as wait staff and limousine drivers. Companies are given a QR code after registering with UpTip whereby customers scan the code from their smartphone to view the company's profile, give a star rating, leave feedback and, of course, provide a tip. Tips are deposited directly into a debit card or bank account of choice.

The travel and hospitality industry is still struggling in the wake of COVID and so are the people whose lives and livelihoods have depended on tipping. Eric Plam, UpTips's founder, believes the pandemic has been a catalyst to help people figure out how much they value people who serve us and the services they provide. UpTip will help collect the data used to determine how much service staff are valued. "We really believe that personality, enthusiasm and merit should be rewarded and so this is one of the reasons why we like tipping and that's one of the things we do with our service and ratings platform -we try to raise people who are doing a great job because we want to help them advance in their careers", Plam said.

Valora -Making money borderless, virtually

Built on the Celo blockchain, Valora's mission is to unlock access to financial opportunity so everyone can create and share value without barriers. Using blockchain technology, this crypto FinTech enables users to send money from one continent to another in seconds, with near-zero fees. Think microfinance 2.0. With the backing of sports and entertainment celebrities Kevin Durant, Nas, and Casey Neistat, and the nonprofit Grameen Foundation -whose mission is to enable the poor, especially women, to live in a world without poverty and hunger