This sponsored post is produced in association with Yodlee Interactive.

Fintech customer expectations are sky-high, driven by significant technology advancements including mobile and wearable innovations, and equally important, generational shifts driven by millennials and Gen Z.

In the drive to meet those expectations, most of the personal financial management (PFM) tools available today focus on straightforward budgeting. But a new wave of digital financial management solutions will go much further. Like a financial planner in the back pockets of consumers, they’ll incorporate analytics to look at spending habits and offer a range of advice on budgeting and wealth management — and even prompt users to think twice before giving in to impulse buys, which can derail long-term goals.

According to Ron Barasch, senior director of marketing at Yodlee (a cloud-based platform enabling digital financial innovation), PFM is about to radically change as this next wave of intelligent digital financial management solutions and apps begins to enter the market.

Future fintech apps will be proactive

“This new generation of digital financial management solutions and apps will make the tough decisions for the consumer,” Barasch says. “They’ll look at your past earning and spending behavior and offer a range of fiscal advice uniquely tailored to the individual.”

By incorporating predictive analytics, future fintech solutions will learn a consumer’s financial habits. They’ll churn through transaction history to spot trends and use that information to provide intelligent recommendations on decisions such as what credit card to pay off first, how much to put down on a home, or how to save for a new car. They’ll even suggest things like whether it’s better to buy or lease a car.

“Predictive financial solutions will provide direct insight on how the end user can improve finances moving forward. In this way, consumers can be proactive instead of reactive,” says Barasch.

He adds smart financial apps should be simple, sleek-looking, and most of all, intuitive to the user’s financial behavior. Ultimately, these tools will learn from past behavior and predict how a user will respond to different kinds of motivation.

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These apps will give the user a nudge when they veer off track, which is why mobile devices are a great asset. Most people carry their smartphones with them everywhere. And as people increasingly use their phones as payment systems, these apps will offer instant feedback on spending habits.

Predictive and personalized financial apps will notify you before you splurge on a vacation or repeatedly buy that daily $3 cup of coffee. Because by foregoing those expenses and repeatable habits, you might get closer to the down payment on a house or car. In this case, a well-timed nudge has a powerful effect.

“The key is anticipating rather than reacting. Rewarding rather than warning,” says Barasch. “Your app will become your partner in getting where you need to be. These apps will take the work out of budgeting and do more of the thinking for you.”

Making it happen

All this sounds great, but why aren’t predictive digital financial management solutions and apps available now? What’s keeping companies and financial firms from developing them and making them available to the public?

Barasch explains financial institutions traditionally are not first movers. On a whole, banks tend to be fairly conservative. He believes the majority of innovation around predictive fintech will come from startups and other fintech innovators. But these companies will need adequate funding to pull off the technology.

“You need to hire data scientists to build the algorithms for these tools, and that gets expensive for startups. A lot of them might have the ideas, but they don’t have the financial backing or support to make it happen,” Barasch says.

Another hurdle is that financial institutions are the guardians of the critical financial data that is key for fintech innovators.

Collaboration is key

Despite the existing rift between tech companies and financial institutions, there is now new hope for a profitable alliance on the horizon. Digital giants and fintech startups are often depicted as poised to gobble up bank customers. Meanwhile, financial institutions, which were commonly considered blind and slow, are finally seeing the mutual benefit of collaboration.

It has not been uncommon for fintech startups to take a totally disruptive attitude toward banks and the established financial system. The inventors and early, early adopters of these services, including Bitcoin, show this extreme.

Bankers, for their part, have expressed more than a little resentment over the regulatory burden they face that their nonbank competitors can ignore, blissfully developing products for consumers without the need to spend the time on compliance and regulatory concerns. The playing field is not level, and banks have a high hill to climb.

Banks face regulation from all sides, including pronouncements on what kind of technology they can use and how they should evaluate it. Even community banks — who were supposed to be exempt from many of the provisions of the Dodd-Frank bill — show in a recent report from the Cato Institute that they are, in fact, more hampered by the regulations than not.

Although warnings for banks to go digital and mobile are still dire, and predictions that banks will have their lunch snatched by the tech companies may still be gleeful, attitudes are starting to shift. The smart technology companies, financial technology startups, and global banks are beginning to collaborate.

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