What is “lifestyle banking” and what does it mean for your money?
Whether we like to admit or not, it’s true to say that many of our life goals are underpinned by the decisions we make with our money.
From our overdrafts to our choices in investment portfolios, financial products fuel our day to day lives. They empower and protect our futures, as well as those of our families and loved ones.
Think about it for a second — consider student loans and student bank accounts with free overdrafts; think about the credit cards that reward us for coupling up and the joint accounts that we’re advertised as acts of commitment; note all the products out there targeting first-time buyers and the pension schemes reminding us of retirement.
These are all “life stage” products. Whether they’re loans, mortgages, investments, and savings — they are packaged up and connected to key moments from studenthood to adulthood, parenthood to old age.
But as Liz Lumley, VC Innovations, tells me, it’s now possible to go much further when it comes to productising the different parts of our lives in terms of our money.
“A lot of financial products are fashioned around life events — college, buying a home, having a baby etc.,” Liz says, “But now we have better technology and data so that we can be more sophisticated with the financial products on offer. For example, if you don’t have a baby, how can you spend your money? If you have a different lifestyle, how will that impact your pension and retirement?”
In other words, banks and finance providers can start to offer solutions based on our lifestyles rather than preconceived life stages.
Lifestyle not life-stage
We all live incredibly diverse lives with differing priorities. If you’ve read any of our other blogs on setting financial goals or mindful money, you’ll know that.
Some may want to travel more and deprioritise homeownership. Some may take time out of their career for their families and others may decide to remain child-free. The products that two people of the same age might need today, could be vastly different for a number of reasons — not least their goals and ambitions.
“The world is changing,” says Liz. “When I first worked in banking, I went to a persona workshop and the persona that was created was of a 28-year-old guy who owned a flat, had a pension, and had a disposable income too. This character was perfect — but when we all look back at our financial lives, there is no perfect anymore (if there ever was). The banking world has to learn to cater to people who become ill, who lose their jobs, take time out for personal or family reasons, and so on.
“People are also living and working a lot longer, so we’re not looking at a world where you retire at 65 anymore. In fact, there’s a stat that suggests around 60% of people receiving a state pension also work and have a PAYE job — which is a lot of people in old age not in full retirement.”
The fact is that our modern financial lives are complex — but new tools and products can assist us all when it comes to meeting our needs and achieving our goals.
In the ikigai app, for example, the goals section allows you to get started by investing money that can go towards key ambitions (like starting a business or buying a new home), financial security (like an emergency fund) or to simply help you build your wealth. With each suggested goal, they’ve also pulled together a different kind of portfolio that’s determined both by your risk profile and the type of goal (after all, you may be more open to volatility when ‘building wealth’ than with money you want to use as a ‘safety net’).
As someone who is open to a certain amount of risk and is primarily looking to now grow my money through investing, the level of flexibility is appealing. It feels like the app allows me to make choices that fit my lifestyle. Providing insights through the platform about how much risk to take and whether that particular portfolio is right for me, it puts me in control but still automates enough to feel simple and easy to use.
To go back to what Liz was saying — products that are more focused on lifestyles rather than life-stages make our experiences with banks and fintechs more personalised and empowering. They unlock data and put it back in the hands of consumers, giving us control of our money. Moreover, it makes banking become more than just generic products in a niche marketing skins — in the long-term, they should be able to help identify problems, address concerns, support ambitions, and help us all curate a bespoke suite of financial products that solve our immediate needs.
Likewise, if technology can help create better lifestyle products, we should be able to address some of the long-term issues like the wealth gap and pension gap. By unlocking financial data, banks and providers can really start thinking about how to ensure everyone has the right products for them, rather than a persona that probably doesn’t really exist.
Not quite there yet
In terms of where we are in the journey from “life stage” to “lifestyle” banking — current technology has put us on the map, but we’re not quite there yet.
However, the shift is happening. And right now, assessing the products available and what they can do for us is incredibly powerful. Just like with budgeting or practicing conscious consumerism, by thinking about the products we choose to use and why, we can also understand what we’re prioritising and our underlying values.
As Liz says, “Banking is about your lifestyle — it’s embedded in all stages of your life. But the products we have need to serve all needs, not just perfect needs.”
So, when using your chosen financial tools, why not ask yourself the following: does this app, this platform, this product, this account actually serve my needs right now?
Will it support my ambitions, personal and financial, present and future?
If not, it could be that there’s a better option out there for you, one that can empower you, ensure you feel more in control of your money, and help you reach your goals.
Authors: Harriet Allner and ikigai
Harriet Allner is a writer, blogger and fintech specialist. She cares about stories that matter and is passionate about promoting conversation around money positivity and financial feminism.
We built ikigai specifically for those who want to bring their lifestyle to the next level, by taking better care of their finances.
ikigai beautifully combines wealth management and everyday banking in one single app. And by doing so, it creates a whole new world of opportunities.
Discover more at: https://ikigai.money/
With investing your capital is at risk. ikigai is not a bank.
The value of your portfolio with ikigai can go down as well as up and you may get back less than you invested. Returns are not guaranteed and any historical returns, expected returns , or probability projections referenced on our website may not reflect actual future performances. You should seek financial advice if you are unsure about investing.
This article is not advice. ikigai is a trading name of Ikigai Invest Services Limited, a company registered in England and Wales (Company number: 12011662). Ikigai Invest Services Limited is registered with the Financial Conduct Authority (FCA) as an EMD Agent (reference number: 902740) of PayrNet Limited, an Electronic Money Institution authorised by the FCA (reference number: 900594) and is an appointed representative of WealthKernel (reference number: 723719) which is authorised and regulated by the FCA. ikigai is not a bank. Registered address: 16 Great Chapel Street, London, England, W1F 8FL.
