04 Jan 2024

What will 2024 bring for consumers and their finances?

As we step into the New Year, Kate Cunningham, Consumer Finance Expert & Director within MHP’s Financial Services team, explores the consumer finance trends likely to grow in 2024.

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“I’m going to pick a stock and talk about why I think it’s interesting. And that stock is GameStop.”

So says Paul Dano playing ‘wallstreetbets’ investor Keith Gill in Dumb Money, Hollywood’s chronicling of the 2021 GameStop saga. The real-life scenario saw a subsequent short squeeze on the stock and what the Financial Conduct Authority called a “speculative frenzy”. In the US, trading platform Robinhood imposed restrictions barring new long positions in GME, for which it later apologised in front of Congress.

It was a watershed moment highlighting the power of retail investors, but also raised questions about what responsibility trading platforms have for educating their users. That it took place in January is telling: Christmas is often a time of increased financial stress, so the chance to make a quick return is tempting. As we step into 2024, the cost-of-living crisis is entering a new phase, and Robinhood itself has launched in the UK with a promise to “drive innovation” in this market. With that in mind, here are my thoughts on the other interlinked trends likely to grow this year, driven by consumer expectations.

1. Social media’s (continued) influence on investment decisions

The surge in retail investment shows no signs of abating. Platforms that democratise access to the stock market continue to attract millions of new users, many of whom are younger and more socially connected than ever before. This is set to get a further boost with the government’s potential sale of its remaining shares in NatWest to retail investors this year. If that goes ahead, we should see even greater adoption of the platforms that facilitate this, if launched in the right way. But the battle for their attention, and for provision of reliable information, has stepped up yet another level. Investors are further delving into social media and online communities to make investment decisions, and Gen Z is largely ditching Google and instead browsing TikTok, Instagram and Pinterest as a form of search engine.

2. Impact goes mainstream

The world quite literally burned last year, and pictures of holidaymakers forced to abandon their hotels spread across social media. Like it or not, it’s when perceived ‘far-off’ problems start to seep into everyday life that people begin to sit up and take notice of the evidence. Sustainable investing is no longer a niche interest; it’s a significant force in the financial world. People want to know not only how their money is invested, but the impact it is having. Harnessing this momentum, the Make My Money Matter campaign with Olivia Colman thanking pension savers for allowing oil and gas companies to destroy more of the planet was particularly powerful. And it’s not just the E – activists speaking out on the S and the G are, again thanks to social media, given a bigger platform than ever before.

3. AI: the future-gazing financial adviser

Cost and fear of judgement have long been two of the main barriers to getting qualified financial advice. But people are increasingly seeking personalised financial experiences tailored to their unique needs and life stages. AI is already being used as an aid by the industry to offer these insights and automate often complex decision-making processes, and this is becoming more advanced at pace. While there are challenges in terms of data privacy and over-reliance on historic data, the reality is that AI-driven tools are best placed to identify future trends. It’s this hyper-personalised, predictive potential that will be the real game-changer.

4. BNPL your cab fee

Well, not yet. Embedded finance is nothing new, but the demand for convenience has reached new heights and the growth of all of the above – digitisation, transparency, personalisation – feeds into this. As the line between financial and consumer services continues to blur, so expectation of getting two, or even three financial services in one increases: a pre-approved loan for a vehicle purchase, payment facilitation, and automatic integration of that payment plan into a bespoke financial dashboard complete with those hyper-personalised tips and updates. While that’s a while away, more financial partnerships with consumer brands to offer a seamless, frictionless experience will be the only way to win – and keep – customer loyalty.

5. Financial literacy as a core focus

On the point of loans, financial literacy became more of a necessity last year, but the UK is still a weak performer when benchmarked against similar economies. A report from Wealthify and the Cebr found that three quarters of the country falls below the financial literacy benchmark. The desire is there to manage money or invest more effectively, but we have long failed to offer sufficient financial education in schools and habits then slip down the generations. We’re likely to see an increase in educational resources, workshops and interactive tools designed to demystify finance, shaping a financial landscape that is not only more innovative, but inclusive and responsible.

So what does this all mean for communications?

Understanding and embracing these trends is crucial to financial services brands looking not only to stay relevant, but to influence. Consumers are rightly more discerning, seeking services that can better fit into their lives. Reaching them should be via the spaces they already occupy and the formats they are naturally drawn to – whether that’s via video games and TikTok, or LinkedIn and broadsheets – and with content that informs without preaching, driving natural debate and conversation.

While having a set of agreed guidelines or key messages to inform activity can provide a valuable skeleton to work from, flexibility and willingness to adapt around them is key – things move quickly. As the GameStop saga showed, it only takes one post.

 

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