FS-2024-0724 | May 2025
The Relevance of Financial Technology: Bridging the Gap Between Consumers and Services
By Troy Anthony Anderson, Ed.D., Naimani Staley, and Isaias Tesfalidet
As millions of individuals embrace advancements in the various resources that are easily accessible to consumers through their electronic devices, known collectively as financial technology, the role of financial education and digital literacy within a larger social context has reached unprecedented importance. Land Grant University programs offered via Extension are increasingly called upon to serve as agents of social change. These programs are expected to reflect societal values and cater to community needs. According to Brown (2015), this social reconstructionist orientation emphasizes critical thinking, problem-solving, and collaboration. It focuses on change efforts that navigate new boundaries and practices, such as those in mobile banking. By emphasizing societal empowerment through Extension and awareness, this approach aims to address social injustices and inequalities. In the realm of financial technology, it seeks to leverage innovative tools to promote financial inclusion, democratize access to resources, and empower marginalized communities, fostering a more equitable economic landscape.
Financial technology serves as a powerful tool for both producers and consumers alike, offering a variety of resources that are easily accessible to consumers through electronic devices. This seamless integration of data and automation underscores financial technology as the primary language of modern production. Extension programming plays a pivotal role in preparing families within the community to engage with financial technology dynamically and constructively. By equipping individuals with the necessary skills and understanding, these programs ensure that community members can effectively participate in and contribute to the evolving digital economy. Ultimately, this prepares them not only to navigate the intricate landscape of financial technology but also to harness its potential to improve their economic well-being and societal inclusion.
Extension plays a fundamental role in enhancing financial literacy by providing access to educational resources and workshops that focus on financial technology. By bridging the gap between traditional financial education and the rapidly evolving landscape of financial technology, these programs help consumers transition smoothly into using various digital financial platforms. Extension efforts often include personalized guidance, enabling individuals to understand and utilize apps, online banking and budgeting tools effectively. This support demystifies complex financial technologies, making them accessible and understandable for a broader audience, ultimately fostering informed financial decisions and empowering consumers to their finance more adeptly through the various financial learning platforms.
These learning platforms further offer a convenient and user-friendly option for banking, instead of doing it in person or on a computer. According to Andrews (2018) the growing use of self-service technology in the U.S. economy has contributed to a significant decrease in the need to access a physical bank. While US consumers may experience occasional connectivity issues and technical glitches, they continue to navigate an evolving landscape of security protocols in an era where almost everyone owns a smartphone. In response, financial institutions such as credit unions, banks, and loan companies have focused on achieving success by investing in various mobile applications. The bank’s mobile app enables clients to conveniently request services such as opening an account and scheduling payments, thus contributing to increased transactional volumes and fostering business growth. A study by Smith et al. (2022) found that mobile app usage increased transactional volumes by 25%, enhancing customer engagement and business expansion. Therefore, customers now have the ability to perform a variety of tasks using the app, from transferring funds between their savings to checking accounts to reporting fraudulent activity. These advancements further highlight the transformative impact of financial technology on consumer convenience and financial institution efficiency, paving the way for a more connected and adaptable future in personal finance.
The combination of banking and technology opens the doors to immense possibilities. Individuals can take control by being more engaged in their financial responsibilities. Dowd, Rosinger, and Fernandez Castro (2020) posit that adaptive responses to global needs and successful mobile execution of functional tasks, such as financial management, indicate the achievement of universal financial equity. Despite that, mobile banking apps established by developers can offer numerous features seen in traditional bank apps, but new technology is more readily accepted when it contains familiar components. Likewise, there are instances where developers can enhance the application with extra capabilities, expanding the available services and options for a more comprehensive user experience. The distinction lies in the fact that financial technology companies are typically not banks in the traditional sense. Instead, they collaborate with banks that are insured by the Federal Deposit Insurance Corporation (FDIC) to provide their app users with banking services and safeguard their deposits.
If consumers hold accounts with a bank or credit union, it is highly likely that they will have access to a mobile banking application. Banks and credit unions have the capability to provide mobile banking services through a dedicated app exclusively for their clients. Below are a few examples of mobile banking apps offered by financial technology platforms such as Paze, Money Gram, PayPal, and Revolut.
When is Financial Technology Needed?
A wave of change is sweeping through the financial world, spurred by digital transactions, the innovative neobanking sector, and the unpredictable cryptocurrency market. This transformation is reshaping how we work, earn, and spend money, creating a palpable sense of both excitement and uncertainty. Because of the benefits of efficiency and user-friendliness, Anderson (2023) suggests that incorporating financial technology into one’s daily routines is essential for better financial management. On the other hand, one person’s journey of navigating and adopting the world of financial technology may not mirror those of someone else in terms of experience and outcome. So, how can we precisely define and assess the adoption, much less the necessity of doing so? Defining and assessing behavioral change involves several stages. According to Saunders et al. (2019), the process typically includes problem identification, hypothesis creation, hypothesis testing, data collection, and reflection, ensuring comprehensive understanding and evaluation of the results. By using this approach, we can thoroughly examine the potential upsides of financial technology and effectively determine the most suitable demographic for its adoption.
Online banking, therefore, not only serves as a convenient financial tool but also becomes an indispensable part of modern financial ecosystems. Ghelani, Hua, and Koduru (2022) argue that as more people rely on mobile banking services, financial institutions must prioritize conducting a thorough risk assessment or updating their existing assessments during the various stages of designing, testing, and rolling out a mobile banking product. This shift towards digital solutions directly contributes to financial technology’s role in empowering individuals, providing them with the financial independence and flexibility required in today’s fastpaced world. Consequently, whether one is managing daily expenses or navigating financial needs while traveling, the ability to access banking services online is essential for maintaining financial stability and peace of mind.
As technology advances in the financial services industry, it is vital for consumers to comprehend market dynamics and effectively utilize these innovations for their own success. According to Anderson (2023), the increasing reliance on mobile services and the associated convenience is expected to sustain the predicted growth trajectory of mobile banking in the coming years. The use of mobile banking provides customers with increased convenience as it allows them to complete tasks while on the move. However, the ease and speed of this method unfortunately introduces a new level of risk and vulnerability.
Weighing the Benefits Against the Risks
The integration of sleek new features, like biometric logins and AI-powered financial advice, into mobile banking apps is a direct result of the rapidly evolving technological landscape. It is important to note that not all mobile banking apps are the same, despite providing similar features. The extensive range of features in certain applications can make them overwhelming, while others are designed to be simpler. The most important aspect of choosing the perfect mobile banking app is to ultimately find the one that offers the features you require the most. Similar to any other service, mobile banking has its own set of pros and cons. In the following tables, you will discover easy-to-understand descriptions of frequently used terminology in mobile banking apps.
| Pros | Brief Description |
| Accessible | Ensure ease of use for consumers, including those with disabilities, enhancing financial inclusivity and convenience. |
| Virtual | A task that is performed in a non-conventional office environment. |
| Self-Guided | Independently, at a pace that feels comfortable for the person. |
| Free | There is no fee associated with the product being sold or advertised. |
| 24/7 Access | Available for use, seven days a week, twenty-four hours a day. |
| Real Time Help | Chat feature or a medium to contact customer service. |
| Constant Monitoring | A frequently implemented security measure that keeps a close eye on risk or compliance issues within a company’s financial system. |
| Simplified ability to send and receive money | Instantly receiving money from another individual or sending money to someone else. |
| Ability to pay bills | Payment for bill(s) made easily accessible with a single click. |
| Streamlined transactions | Eliminate the need for writing checks, filling out bank forms, or dealing with bank staff in person. |
| One central location for funds | A single place / location for storing money. |
| Cons | Brief Description |
| Subjected to scams | Exploiting vulnerable individuals, which includes the elderly or young people, to gain access or control over their finances through manipulation. |
| No real time contact | Not legally bound to the company or financial organization. |
| Fees + Interest Rates | When someone borrows money, they are required to pay interest, which is a percentage of the borrowed amount collected regularly by the lender. A fee is usually a one-time fixed price that is imposed for a particular service. |
| Limited Protection | Without robust security measures, sensitive personal and financial information can be vulnerable to hackers. |
Examining the pros and cons can offer a valuable understanding of the strengths and weaknesses of mobile banking. Depending on one’s lifestyle and personal preferences, the advantages and disadvantages can vary for each individual consumer.
Navigating Online Banking and Mobile Banking Features
Online banking offers a streamlined approach to effective financial management. However, it may take some time to adjust to online banking and mobile features, especially if the consumer is not familiar with online platforms (Dowd, Rosinger, and Fernandez Castro, 2020). The role of navigational tools in online banking is paramount, enabling users to efficiently locate and utilize necessary functionalities. According to Breza, Kanz, & Klapper (2020), navigation tools vary by the service, with the “home menu” acting as the central hub for all the links within the mobile application or system. Customers also have access to valuable tools like accounts (with a clear distinction between account number and routing number), transfers, and deposits. To navigate online banking applications independently, it is important to have all these tools available. While internet banking enhances accessibility, it is essential to consider the associated security threats (Ghelani, Hua, & Koduru, 2022). To ensure user safety, Extension educators of finance recommend accessing online banking only through the bank’s verified app or via the official website address the financial institution has provided. Secured URLs use encryption to protect data, ensuring privacy and security for consumers using mobile banking apps, while unsecured URLs lack encryption, risking data exposure and potential unauthorized access.
The following features are key to navigating online banking via a smart device.
- Interest earned this period versus interest paid year to date: Earned interest pertains to the interest that you have accumulated on your investment within a certain timeframe. Accrued interest is the interest that your investment is currently generating, but you have not yet received. Paid interest, on the contrary, is the interest that you have already received as compensation.
- Differentiating checking and savings accounts: A checking account grants account holders the ability to deposit and withdraw funds, whereas a savings account focuses on earning interest.
- The distinction between an account number and a routing number lies in the fact that the former identifies a specific account, while the latter identifies the bank and branch associated with that account.
- Routing numbers used for electronic payments versus routing numbers used for domestic wire transfers: In basic terms, electronic funds transfer (EFT) are the electronic means by which money is transferred between bank accounts. Generally, EFTs are processed via an Automated Clearing House (ACH) which links to the routing number assigned for direct deposits and electronic payments. Transactions from one bank or financial institution are gathered by the ACH and sent to another for processing. However, there are several similarities that make it tough to distinguish EFTs from wire transfers, which require a routing number used for domestic wire transfers. This includes, but is not limited to speed, cost, payment options, risks, and scalability. Understanding the important variations between EFTs and wire transfers is crucial for consumers to decide which option suits their needs best.
- Distinguishing between available balance and current posted balance: Your overall and accessible balances might differ if your account has pending check deposits, debit card purchases, and ATM transactions that have not yet been processed and cleared.
- A Digital Wallet: This is an application that can be installed on your mobile device to enable you to link your card to financial technology companies such as PayPal for online purchases. Adding your card to PayPal through your mobile banking app is done through a third-party digital wallet provider. It is critical to understand that when you add your debit card to PayPal, your account may be used on other PayPal properties.
The Importance of Safety First in a World Full of Scams
The active practice of protecting devices, data, networks, and programs from unauthorized access through technology is known as cybersecurity. Protecting customers from financial losses and data breaches requires banks to implement cybersecurity measures. To improve customer experience and maintain a positive reputation, banking organizations prioritize providing clients with a safe financial environment. Consumers can implement their own cybersecurity by equipping their mobile devices with strong security features and securing them with a robust passcode or PIN. Anderson (2023) notes that this set up is important because there are instances where biometrics can be circumvented by using the passcode, providing the scammers with access to your personal information.
What is a scam? Scamming refers to the act of persuading someone with misinformation to achieve financial gain or control. Since scammers continue to create new ways to deceive consumers, it is imperative that consumers stay educated on the best security measures to avoid being subjected to scams. Table 3 presents a summary of the most common types of scams.
| Types of Scams | Brief Description |
| Phishing | A deceptive technique that involves sending fraudulent messages or emails pretending to be someone else, intending to trick individuals into revealing their personal information. |
| Vishing | Fraudulent phone calls aimed at obtaining personal information from individuals. |
| Identity Theft | Occurs when someone fraudulently assumes another person’s identity using their personal information, such as their social security number, credit card details, or full name. |
| Advance Fee Fraud | A tactic in which a scammer requests upfront fees or personal information to trick individuals into believing they will receive goods, services, money, or rewards that the scammer ultimately fails to provide. Exercise caution when encountering scams that promise to send you a free item or service. |
| Forex Scam | A Forex scam is a type of financial fraud that targets individuals who are involved in foreign exchange (forex) trading. These scams typically promise high returns with little risk, enticing traders to invest their money in fraudulent schemes. The perpetrators of forex scams exploit the complexity and volatility of the forex market to deceive unsuspecting victims. Types of fraudulent structures used to promote forex trading include signal seller scams, robot scams, Ponzi schemes, pyramid schemes, and broker scams. |
| Charity Scams | In a charity scam, someone poses as a legitimate charity or creates a fictitious charity with a convincing name, intending to extract money from unsuspecting individuals. These scams can take many different shapes, but they usually kick off with the scammer sending you a check that appears to be real but is, in fact, fake. |
| Ransomware | A malicious software that locks a victim’s computer system, holding their data hostage until ransom payment is made to the attacker. |
| AI Voice Cloning | The process of AI voice cloning involves analyzing samples of a person’s voice to imitate their original tone and pitch. To create convincing voice clones, scammers use recordings of a person’s speech, employing sophisticated technology to mimic their vocal patterns. Through the use of AI-generated voice replicas, a scammer might contact a victim’s associate, falsely claiming to be the victim and demanding money. A person hearing the realistic voice replica over the phone may unknowingly share sensitive or private information. |
| Robocall | Pre-recorded messages delivered through auto-dialing software to people across the world. Scammers use robocalls to pretend they are calling from government agencies regarding Social Security account, taxes, or Medicare. |
| Cryptocurrency Scam | Attempts to steal a person’s crypto (virtual) assets or personal information. A cryptocurrency scam is characterized by deceptive practices designed to exploit investors, businesses, and users leveraging cryptocurrency. Examples of fraudulent structures include, but are not limited to, phishing attacks, Ponzi schemes, fraudulent investment platforms, and hacking attempts. |
| Gift Card Draining | Thieves remove gift cards from the package to capture numeric codes, then return the card to the shelf. When an unsuspecting customer purchases the gift card at the cashier, the funds are being directly uploaded to the account the criminal has accessed. |
| Romance Scam | A scammer creates a fake online identity to establish a romantic relationship with an unsuspecting victim. Once trust and emotional connection are built, the scammer manipulates the victim into sending money, gifts, pictures, or personal information. These scams typically occur on dating websites, social media platforms, or through email. If demands are not met, threats may follow with promises to disclose private pictures (sextortion) or leak personal information on the dark web. |
Navigating Consumer Safety: Protecting Yourself When Out and About
To mitigate the risk of fraudulent activity, the consumer should refrain from sharing personal account numbers, passwords, or Social Security number. Be cautious about paying a fee before receiving a prize that has been guaranteed. Any request for payment of fees or taxes as a prerequisite to receiving a prize or substantial funds should be regarded with extreme skepticism, as it is likely fraudulent. Here are some additional tips to stay safe:
ATM and POS Terminal Skimming
Automated Teller Machine (ATM) and Point of Sale (POS) are two different systems for financial transactions that serve different purposes. ATMs allow customers to perform various banking transactions, such as withdrawing, depositing, and transferring funds without the need of a human teller. A POS system combines hardware and software that enables retailers and businesses to facilitate and record transactions at the point of purchase by the customer. A scammer may install a “skimmer” at either the ATM or at the POS card reader. Skimmers are commonly inserted into the card reader, placed over the existing card reader, or positioned along exposed cables at ATMs. The skimmer reads the user’s card information encoded on the magnetic strip and records any inputs, such as PINs. The scammer returns later to remove the device and downloads the stolen data.
Check Washing
Even with the convenience of financial technology, the quiet act of writing a check and sending it through the mail holds an appeal for some, especially when online payment platforms impose added service fees. However, if a personal check is stolen or falls into the wrong hands, the consequences can be severe, potentially leading to financial loss and identity theft. The check may be manipulated using chemicals to eliminate the original payee and amount of payment. The check, subtly altered to reflect the criminal’s name or an accomplice’s, is then deposited or cashed, swiftly emptying the victim’s bank account.
Juice Jacking at Charging Stations
Many travelers have a cell phone or some other electronic device with them, and when the battery runs low, they may plug in the USB cord without using the charging adapter. Doing so may provide a hacker access to a person’s device via the USB port. This is known as “juice jacking.” Therefore, it’s important to avoid public USB port charging stations, such as those found in unsecured locations like the airport and hotel lobbies, which could expose one’s device to juice jacking.
Free Public Wi-Fi
It is not always a wise idea to take advantage of free public Wi-Fi when visiting a new business or location. Connecting to the Wi-Fi host may inadvertently expose a device to potential hackers. Storing passwords and credit card information on phones for easy website logins and purchases also creates a significant security risk when connected to public Wi-Fi networks, as these networks often lack encryption, leaving personal data exposed. This can lead to the theft of personal information or stored passwords on the phone.
Tap, Click, Pay: The Future of Banking Remotely
Initially, mobile banking was limited to basic online transactions, such as checking balances and transferring funds, with a clunky interface and slow speeds. However, the emergence of financial technology has spawned a myriad of convenient services, such as mobile banking apps that let the user manage their finances from their phone, and contactless payment systems that offer swift and seamless transactions. Today, the significance of banking via online and mobile features goes beyond mere convenience. Therefore, in this rapidly evolving digital landscape where AI-driven threats are becoming increasingly sophisticated, the imperative to strengthen online banking security to safeguard users against fraud and data breaches is undeniable.
Consequently, the future of finance is inextricably linked to the continued expansion of online and mobile banking, a transformative journey that will fundamentally change consumers’ financial habits, introducing new levels of convenience and security, but also introducing potential risks. Fueled by rapid technological progress and a consumer base clamoring for convenient, secure, and personalized financial services, the key trends shaping the future of financial technology are becoming clear.
- Enhanced security measures. In the face of increasingly complex cyber threats, a heightened focus on security, encompassing constant vigilance and cutting-edge technologies, will be essential. The integration of advanced technologies such as biometrics, artificial intelligence, and blockchain will bolster security protocols, ensuring that customers’ financial data is protected against potential breaches.
- Personalized banking experiences. Banks will harness big data and machine learning to offer personalized financial advice and services tailored to individual needs. This shift towards customization will improve customer satisfaction and loyalty as clients receive more relevant and timely financial solutions.
- Seamless integration. The future will likely see a seamless blending of various financial services and platforms, creating a more unified user experience. By streamlining interactions between financial entities, open banking initiatives empower customers with a more holistic and efficient approach to managing their finances.
- Greater financial inclusion. Online and mobile banking features have the potential to increase financial inclusion, providing access to banking services for underserved populations worldwide. By reducing the barriers to entry, these financial technology platforms can help bridge the gap for those without access to traditional banking infrastructure.
The future of online and mobile banking is bright, promising a more accessible, secure, and personalized banking experience for consumers. As these technologies continue to evolve, they will play a pivotal role in shaping the future of finance, driving innovation, and setting new standards for convenience and efficiency in the banking industry. Embracing these changes will not only benefit consumers but also pave the way for a more inclusive and interconnected global financial ecosystem.
References
Anderson, T. (2023). The Abstruse Art of Adulting: Wish I Knew About it Sooner – Solving Real World Problems with a Financial Mindset. Independently Published.
Andrews, C. K. (2018). The overworked consumer: self-checkouts, supermarkets, and the do-it-yourself economy. Rowman & Littlefield.
Breza, E., Kanz, M., & Klapper, L. F. (2020). Learning to navigate a new financial technology: Evidence from payroll accounts (No. w28249). National Bureau of Economic Research.
Brown, L. D. (2015). Bridge-building for social transformation. Stanford Social Innovation Review, 13(1), 34-39.
Dowd, A. C., Rosinger, K. O., & Fernandez Castro, M. (2020). Trends and perspectives on finance equity and the promise of community colleges. Higher Education: Handbook of Theory and Research: Volume 35, 517-588.
Ghelani, D., Hua, T. K., & Koduru, S. K. R. (2022). A Model-Driven Approach for Online Banking Application Using AngularJS Framework. American Journal of Information Science and Technology, 6(3), 52-63.
Saunders, M., Lewis, P., & Thornhill, A. (2019). Research methods for business students (8th ed.). Pearson.
Smith, J., Johnson, L., & Williams, R. (2022). The impact of mobile banking applications on transactional volumes and customer engagement. Journal of Financial Services Marketing, 27(1), 45-58.
TROY ANTHONY ANDERSON
tanders4@umd.edu
NAIMANI STALEY
nstaley@umd.edu
ISAIAS Y. TESFALIDET
itesfali@umd.edu
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