Financial Predictions For 2017

Welcome to 2017, everyone! If 2016 is anything to go by, this year is set to be a wild and uncertain ride. However, we’ve looked into our crystal ball, and have a few financial predictions for 2017. Check them out below.

The Prepaid Industry Will Continue To Grow With New Technology

Prepaid is an easy-to-use, flexible, and widely accepted form of payment and, with the near-ubiquity of smartphones and the rise of mobile payments and wallets, it is one industry that will continue to grow in popularity. Innovations such as virtual gift cards, cards registered to biometrics, and mobile payments like Apple Pay, Android Pay, etc., will make prepaid even more attractive to new and existing customers and businesses. Over the next five years, overall spending on mobile devices is expected to increase by 23 percent annually from 2016 to 2021.

According to eMarketer, in 2016 “roughly one-fifth of all U.S. smartphone users used their phones to pay at the point of sale, accounting for more than $27 billion in transactions.” A report done by MasterCard® estimated that the prepaid card industry will grow to $822 billion globally by 2017, and this number isn’t even taking into consideration mobile payments or other transactions not linked to a physical card, nor any business-to-business transactions.

More and More People Will Continue to Use Cards Over Cash

2016 was the first year EVER that cash was not the single largest source of consumer payments. Last year, by a slim margin, more consumers paid with cards than cash–44.1 percent compared to 43.0 percent. By 2021, nearly half of all consumer payments are expected to come from cards (49.1 percent). The reason for this? Greater access to financial products in developing nations (developing markets recorded a 16.7 percent increase in non-cash payments in 2014), rise of alternative payment methods such as open-loop prepaid cards that work with new technology, and the rapid rise of non-cash payments in China over the past decade (if the current growth trends continue, non-cash transaction volumes in China are expected to surpass those in the Eurozone by 2021, placing the country second to the U.S.).

Prepaid Is On The Rise, Traditional Banking Methods Are On The Decline

According to the second annual “How Canadians Pay Today” survey from the Canadian Prepaid Providers Organization, more and more consumers are picking prepaid cards over old-school banking methods. In 2016, 95 percent of consumers said they were satisfied with the prepaid products, up 22 percentage points from 2015, which easily stands out as the highest satisfaction rate for all payment tools. “60 percent of consumers find it appealing to use prepaid cards to help their children manage their money [and] 47 percent of those with kids under 18 at home would consider doing this.” More consumers are seeking out American Express, Mastercard and Visa prepaid cards compared to 2015. On the flipside, 33 percent of respondents said they do not want to use “traditional banks because alternative providers and new tools are cheaper and more convenient.” 66 percent of consumers are concerned about the security of their credit and debit cards when making online purchases, however only 28 percent of people had similar concerns about prepaid cards.

Credit Card Debt Will Break All-Time Records, Topping $1 Trillion Owed

Despite the rise of debt-free payment alternatives like prepaid, 2016 was a record-setting year for consumer credit card debt. Q1 of 2016 saw the smallest paydown since 2008, while Q2 and Q3 saw the biggest build-ups since 2007. Last year also saw the largest net increase in credit card debt since 2007. With charge-off rates currently near historical lows and consumer performance regressing, expect debt to go past $1 trillion in outstanding balances in 2017, blowing way past the record of $984 billion in 2008.

The Consumer Financial Protection Bureau Won’t Completely Die (Probably)

The CFPB has been vociferously attacked by Republicans since its inception in 2010, and with the GOP in charge of Washington, there is concern that President Trump will cause upheaval in the payments and financial services industry. However, it’s worth mentioning that Trump has a spot in the White House because of unprecedented grassroots support, and some would probably take offense if he eliminated an agency that provided almost $12 billion in relief for consumers wronged by financial institutions in only five years. “[The CFPP’s] good work will be undercut by some politicians, even further than it already has been,” Jeffrey Frankel, professor with the Belfer Center for Science and International Affairs at Harvard University, said. “But I hope and guess that it will not be abolished outright.” Like all things Trump, we’ll just have to wait and see.

“Don’t Expect Much [In The Way Of Returns],” Goldman Sachs Says

“Comparing this year’s forecasts to last year’s reveals that, despite a slighter stronger outlook for global growth, expected returns remain low,” Goldman’s Charles Himmelberg writes. “Stronger cyclical growth in the US will probably not do much for asset markets except help shift the narrative from ‘low-flation’ and monetary accommodation to reflation and rising rates.” The firm’s 2017 year-end forecast for the S&P 500 is 2,200, up just 1 percent from 2016’s close.

The Euro (And The European Union) Might Be On It’s Way Out

In Europe, national elections will be held in a number of countries including France, Germany, and the Netherlands, the results of which could help determine the future of the European Union. If these countries should follow the populist results of Britain, Italy, and the United States, we could see the end of the EU, which will throw markets all over the world into an uproar, and have huge financial ramifications.

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