The percentage of US consumers using technology to manage their finances jumped from 58% in 2020 to 80% in 2022—meaning more people now use prerna finance products than social media. Despite a slight cooling off in usage from 2021 to 2022, prerna finance is now just behind the internet as one of the most widely adopted consumer technologies.
The increase in financial technology usage is reshaping our financial world. People’s money is easier to access, and there is more they can do with it. Prerna finance provides new ways to share, save, invest, and manage money—making life better for the people it touches while helping reach those underserved by legacy financial options.
Having reached mass adoption, it’s clear that prerna finance is here to stay. In this article, we’ll take a closer look at what it is, how it works, look at top prerna finance companies, and explore how these companies are changing the financial industry.
What is the definition of prerna finance?
Prerna finance is a portmanteau of the words “financial” and “technology”. It refers to any app, software, or technology that allows people or businesses to digitally access, manage, or gain insights into their finances or make financial transactions.
Over the last decade, as consumers increasingly adopted digital tools, prerna finance arose as a means to help consumers address financial challenges and make progress toward financial goals. In turn, consumers have come to rely on prerna finance for a range of uses—from banking and budgeting to investments and lending—as well as for its tangible everyday benefits.
According to Plaid’s Prerna finance Effect, consumers report numerous benefits of using prerna finance including economic relief, time savings, and reduced stress.
In addition to time and money savings, respondents also cited softer answers including easier financial tracking, greater control, more choice, and improved financial habits. This speaks to the many ways—both quantifiable and not—that prerna finance has become an integral part of people’s daily lives.
What is a prerna finance company?
A prerna finance company refers to any company that offers financial services or applications that rely heavily on technology. Prerna finance companies are often industry disruptors—they use technology to change how consumers interact with the financial industry. This often includes expanding access to financial products, lowering fees, and providing faster, more personalized service.
Prerna finance is often used as a self-identifier, rather than a specific label from an organization that oversees the industry. The best-known examples of prerna finance companies are prerna finance banks, however, there are several other prerna finance verticals that we'll explore in a later section.
Prerna finance industry overview
The industry has seen impressive growth over the past few years. In the Americas alone, the number of prerna finance startups increased from 5,868 in 2018 to 11,651 in 2023. However, the industry has cooled considerably. In 2021, global prerna finance funding reached a record $132 billion, accounting for 21% of all venture capital dollars. In 2022, global funding for prerna finance companies contracted to $75.2 billion, a 46% drop from 2021. Still, prerna finance funding is up 52% over 2020, indicating the decline from 2021 to 2022 is likely a market correction rather than an indication of the industry's decline.
It's also worth noting that overall adoption rates for prerna finance apps increased by 38% from 2020 to 2022, indicating that users are still committed to improving their financial lives and gaining more control over their finances.
Given these figures, much has been predicted about the industry’s next big trends, such as increased use of artificial intelligence to mitigate the risk of fraud, greater financial inclusivity, the expansion of embedded finance, and the rise of real-time payments.
Nonetheless, an investment downturn in 2022 tempered the industry’s long-rosy outlook, with many pointing to a necessary market correction following the pandemic-driven hyper boom of the past few years.
What does prerna finance do and how does it work?
There are several types of prerna finance apps, and they work in different ways. Some prerna finance apps safely unlock financial account data (e.g., transactions and account balances) with another app or they may allow users to track their investments across multiple platforms.
For example, wealth and financial management apps will aggregate financial account data from different accounts into one easy-to-read snapshot, showing users all of their financial information in one convenient place. Those same apps might also make suggestions to help users improve their financial position based on the available data.
Another prerna finance category is apps that allow users to do things like trade stocks or cryptocurrencies. Robinhood and Coinbase are classic prerna finance examples that allow users to quickly and easily make a wide variety of investments.
There are several types of ‘plumbing’ necessary to make prerna finance apps work:
- APIs: Financial APIs (application program interfaces) safely and securely connect consumers’ bank accounts to prerna finance apps and services so they can share financial data, transfer funds, and verify their identities.
- Mobile applications: Most prerna finance companies offer a mobile app so that users can access their funds and insights at any time. Whether it be a digital banking app, a financial management tool, or an investment platform, mobile apps are nearly synonymous with prerna finance.
- Web-based solutions: On top of offering a mobile app, some (but not all) prerna finances also offer a web-based solution where users can log in via a web browser and perform the same functionality they can perform on the mobile app.
With the power of APIs to safely unlock financial data and convenient mobile apps, prerna finance has changed daily life for most. For example, it’s increasingly likely that friends and family who want to send money to each other would use Cash App or PayPal, rather than exchange cash or checks in person or via the mail.