7 banking buzzwords to look out for in 2023

thinking about banking terms

The banking sector is a constantly evolving area with an ever-changing landscape of buzzwords and jargon. Technology and climate change continue to disrupt the traditional way of doing things and it can make you feel like you’re reading another language.

So, if you want to keep ahead of the curve for the coming year, then check out these banking buzzwords to know for 2023!

1. Green Finance

Concerns over climate change have led many to think about where their money is going. In response to this, some banks have begun adopting an ESG investments (environment, social, and governance) policy. A combination of cheap and efficient green tech coupled with the growing concerns for climate change has caused a shift in the banking and investment world.

Consumer demand for green financing has gradually moved the needle on the importance that companies and financial institutions place on green spending. With the increased frequency of the disastrous effects of climate change, you can expect the demand for green financing to grow. 

2. Fintech

Financial technology, or fintech, is quite simply an umbrella term that encompasses everything from digital banking, investing apps, crypto, and even artificial intelligence. Fintech is a rapidly growing area of finance and, especially post-covid, the integration between the internet and the economy has grown substantially. 

The rapid growth of fintech is not just global but even more concentrated locally. Australia is very much at the forefront of the fintech revolution with large companies such as Afterpay originating in Melbourne. In fact, FinTech Australia reports over 800 fintech companies across all state and territory capitals in Australia. 

Fintech is an industry that is rapidly growing. With it, there comes a plethora of new companies and apps that add to the newest developments in banking.

3. Open banking & consumer data right 

Open banking, simply put, allows consumers to freely share their banking data with third parties. The change to open banking has allowed Australian consumers to better save (such as connecting to budgeting apps) and better personalise loans based on their credit rating and spending habits.

Furthermore, with the launch of the Consumer Data Right in 2021, the ease of sharing banking data has only gotten easier and—according to the CDR homepage—it is expected to grow over time as more providers become accredited. In turn, this should allow for the development of a competitive space for fintech companies to participate in the banking sector.

Now, everyday Australians have control over their banking data, opening the way to the growing fintech industry to innovate in new and exciting ways.

4. Budgeting & savings apps

Budgeting can be a hassle when you don’t have it close by. With open banking allowing for the free sharing of consumer data, budgeting and saving apps have exploded onto the scene, allowing everyday Australians to keep track of their spending and support the development of better money habits. Budgeting and savings apps work by connecting to your bank account and analysing your transactions. In this way, you have an easy automatic way of categorising your spending habits and knowing where you can start cutting. 

Just as an example, I found that I had been ordering too many Uber eats, letting me know I needed to cut back. Now how’s that for high-tech budgeting?  

5. Digital Home Loans

More and more it seems everything is going online, and digital home loans are no exception. These online mortgages have proven popular, with even the bigger banks quickly jumping in to set up their own digital home loan offers. 

With fast approval times and ease of access to the internet, it's no wonder more home buyers are adopting this option.

6. Cashback home loan

Speaking of home loans, consumers are looking for better alternatives due to the rise in interest rates. One way in which banks are enticing borrowers to refinance their home loans is through cashback home loans. Basically, cashback home loans give you a chunk of cash (say, for instance, $4000) when you refinance your loan to the bank that offers said loan. 

Whilst banks still make a profit through interest, refinancing your loan to a better deal can still save you thousands … and it’s not too bad having a spare chunk change for when times get tough!

7. Offset accounts for home loans

Having a lump sum of savings that is earning you interest is fantastic and works well as a safety net. Well, what if your savings could help you pay off your loan faster? Offset accounts work like any other transactional account allowing for withdrawals and transactions—the difference is, when you keep your cash in the account for a certain length of time, it works to reduce the interest on your loan. 

Whilst an offset account is useful, having a separate high-interest savings account can also help to keep you safe in case of emergencies whilst growing your cash. 

Check out our comparison of Australia’s leading high-interest savings accounts here.

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