As we start 2023, several changes to the economy have forced the fintech (financial technology) industry to adapt, leaving some things for staff and students to be wary of as they plan for the year ahead.
Recent economic events have impacted all of us and it’s no exception for the HE sector. As students struggle with the cost of living, fintech can be a tool to help manage your finances, but in some cases can lead to misguided spending.
So, as we plan for the year ahead, we ask:
- What is fintech, and how does it impact universities?
- How have economic factors changed fintech?
- Are there any risks of fintech for students?
- What should students look for in fintech?
- How is Blackbullion using fintech to help students and staff?
What is fintech, and how does it impact universities?
Fintech stands for ‘financial technology’ and refers to the use of technology to improve, automate and streamline financial processes.
Put simply, fintech allows money to move faster, and is integrated into most people’s day-to-day life. Whether it be paying for your shopping using contactless payment on your phone, or managing your transactions with mobile banking – fintech takes life’s daily transactions and enables its users to manage them from their pocket.
Typically to date, the convenience of fintech has appealed to the younger generations, closing the gap between the user and a marketplace that can now be navigated from the palm of their hand.
Why fintech impacts universities
As fintech adapts to the current economic climate, it poses different risks and opportunities for both students and staff.
- For students: fintech is a double-edged sword. While it can be a great tool for students to create savings pots and monitor their finances, it can also make spending easier than ever before – leading to overspending.
- For staff: fintech can allow institutions to streamline admin-heavy funding processes
How have economic factors changed fintech?
2023 follows yet another tumultuous year for both the finance and tech sector. In 2022, it felt like the ‘unprecedented’ was happening almost every day!
In 2022, inflation went from an item that was discussed on the business pages to the front page of the papers. The Consumer Prices Index (CPI) rose by 11.1% in the 12 months to October 2022.
As the cost of living skyrocketed, many students were heading to university with prices higher than ever before. We looked at the best ways to help students with the cost of living crisis.
The fintech industry also felt the effects, with a website tracking the fintech sector estimating 30,000 layoffs in the combined fintech and crypto space in 2022.
Move from a low-interest to a high-interest environment
By the end of 2022, the Bank of England had raised interest rates nine times during the year, finishing at 3.5% – the highest interest rates have been for 14 years in the UK.
For many students, it signalled the first time they gained experience with financial independence in a high-interest rate environment. With debt becoming more expensive to service, the opportunities for young people to invest their money or save for a rainy day seemed further out of reach.
Both the rise in inflation and the shift from a low to high-interest environment led to many people looking to find ways to cut their costs, and fintech having to adapt to stay relevant in a completely different economic climate.
Are there any risks of fintech for students?
With a recession on the horizon and an economy likely to remain in a state of flux, the main question is: what have fintech providers done to adapt to the cost of living crisis – and what are the implications of these adjustments for students?
Buy Now Pay Later Schemes grow in popularity among young people
In a time when everyone needs to be careful with what they spend, Buy Now Pay Later (BNPL) use has risen considerably among young people. For students, fintech brings them closer to BNPL companies than ever before.
BNPL offers students the chance to ‘spread the cost’ of purchases that they can’t afford to pay for in a single sum. Where for some this can represent a useful option when operating with a restricted budget, for others, BNPL has led to temptation and overspending.
Companies like Afterpay, Klarna and Affirm are all brands of fintech to approach with caution, with many of these services now available as a payment option for food delivery and clothes apps. There was a 59% increase in retailers working with Klarna alone, giving students easier access and more options to spend their money.
What should students look for in fintech?
Some fintech providers responded to the crisis differently, aiming to find ways to help with the current economic challenges. Fintech makes transactions easier and quicker but can also be a fantastic tool for students to automate savings and manage their living costs.
Benefits of using fintech as a student include:
- Categorising spending – fintech can be used to analyse your spending for you, placing it into categories to see in which areas of your life you spend the most. This can be particularly useful for students monitoring rising utility costs.
- Automating finances – certain fintech apps can schedule payments to automatically send funds for recurring same-date payments. It means for bills like rent that stay at a constant rate, students can make sure they don’t miss a bill and also build their savings!
- Tracking spending – most fintech tracks your spending and gives you updates on how much money you have available to spend. Many will give reminders about where you are up to in the month, as well as the costs that lie ahead.
How is Blackbullion using fintech to help students and staff?
The current economic climate means more people are seeking financial guidance and support as terms like ‘inflation’ have a more immediate impact on people’s daily lives.
At Blackbullion, financial education has always been central to what we do. In times like these, it’s vital to give students information that makes them more financially resilient in the face of economic adversity and allows them to make informed decisions.
Funds Management System
Our Funds Management System (FMS) is a fintech solution that gives our partners the ability to easily manage and administer their organisation’s financial support funds.
Universities have seen a significant increase in applications for hardship support after the economic changes of last year.
The FMS is enabling our partners to meet the increased demand and saving them significant time in admin. In fact, our partners who use it saved the equivalent of 1,119 days in 2022 thanks to the FMS’s automated email feature!
Book a meeting to find out more.