4 trends that may shape personal finance in 2022

Here are the four personal finance trends that may become popular in 2022.

Padmaja Choudhury   /   January 25, 2022

The personal finance industry witnesses trends as technology and applications advance every year. As we start a new year, it’s time to take a look at some trends that may gain popularity in 2022.

Here are the four trends that may become popular in 2022. 

Exchange Traded Funds (ETF)

In 2021, assets under management(AUM) of ETFs (excluding gold ETF) had increased 50%. The AUM grew from Rs. 2,56,237.20 crore in December 2020 to Rs. 3,84,214.16 crore in December 2021. Not only that, the number of retail ETF folios has increased 143% in one year, as per the September 2021 AMFI’s quarterly data. 

Passively managed ETFs track a specific benchmark without any fund manager’s involvement and with a low expense. 

As a result, many experts are recommending an ETF that tracks Sensex or Nifty 50 to kickstart their equity investment journey.

Moreover, as fund houses can only offer one fund in the active fund mutual segment, fund houses are free to launch ETFs representing various themes. Many ETFs are pending with SEBI for approval, so we can expect fund houses to launch more ETFs in 2022.  

However, it is important for an investor like you to select the right ETFs and pick sectoral/ thematic ETFs that you are familiar with. 

Personal Finance Apps

Apps for personal finance and asset management have become increasingly popular in recent years. The pandemic’s economic instability caused people to realize the need of carefully managing their own finances, increasing the use of apps that digitize the wealth generation and management process.

India topped the global market for finance app downloads last year, according to AppsFlyer’s State of Finance App Marketing report, with 149 crore downloads.

Personal finance apps will continue to gain traction and growth in 2022. Many people have grown accustomed to the smooth digital experience. They are likely to continue to explore new features and apps that provide a varied range of investment options, from stocks to gold, as well as wealth management advice. 

If you don’t know where your money is going every month, you can use a money management app. 

Neobanks

Neo banks, sometimes known as digital banks, are becoming increasingly important in the Indian personal finance market. 

According to a recent analysis by BlueWeave Consulting, a strategic consulting and market research business, the Indian digital banking platform industry will be worth USD 776.7 million in 2021. According to the study, the market is expected to develop at a CAGR of 9.8%, generating revenue of USD 1,485.5 million by the end of 2028.

Unlike traditional banks, which provide a more in-person experience, neobanks focus on convenience and transferring all of your money management responsibilities to your banking app. Neobanks provides everything from person-to-person transfers to budgeting tools and quick investment alternatives, payment reminders, and digital receipts, all at a lower cost. 

A neobank is a fintech company that collaborates with a regular bank to provide these services to consumers. Along with simplicity of use and convenience, AI-based technologies are being used to provide a personalized experience.

While there is a demand for rapid financial services, neobanks still fall short of providing a full range of services. However, for the younger generation, the speed of transactions, lower costs, and an intuitive digital experience may be sufficient to see this trend take off quickly.

Buy Now, Pay Later (BNPL)

Many millennials and youngsters are heavily attracted to buy now pay later platforms. BNPL essentially means that you can buy something today and pay for it later, after the end of the cycle which is 15 days or 30 days. Many BNPL platforms also offer interest-free instalments for large ticket-size purchases.  

These services don’t require credit history, and you can enroll for their services when you purchase products online or at retail stores. 

According to Redseer, the BNPL market in India would grow to $45-50 billion by 2026, up from $3-3.5 billion presently. According to the research agency, the number of BNPL customers in the country might increase to 80-100 million by then, up from the current 10-15 million.

However, you need to pay attention while using these platforms, as it can give you a wrong sense of affordability. So, it is best to avoid using platforms unless it is very urgent. Moreover, it is better to build an emergency fund to take care of any emergencies.   

Conclusion

For all players in the personal finance business, the year 2022 promises to be an exciting one as the industry becomes more democratized through innovations that cater to a wide range of people and their requirements. Now, the year 2022 will be crucial in determining the direction and speed of these developments.

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