• Thu. Dec 1st, 2022

Can mobile banking apps be effective “personal money managers”? We are browsing two popular sites

ByCindy J. Daddario

Apr 19, 2022

Millions of South Africans prefer to use mobile banking apps. We examine whether they help consumers save money.

Yes, these are transactions. Easier, faster and more convenient transactions that just a few years ago would have required you to walk into a bank branch and wait in long queues.

With the increasing use of smartphones, apps have changed our relationship with banking by allowing us to download bank statements, send money and make real-time payments, open savings or investments, apply for loans, track expenses, reverse suspicious transactions and debit orders, and instantly lower or raise our credit limits. Some are even zero-rated, which allows us to save data. In short, banking applications make our lives easier and save us time.

But are they changing consumer behavior in ways that help us save money?

Yes, according to FNB and Nedbank whose technology does this through money management coaching.

What is Financial Management Coaching?

When an app shows you usage statistics such as your net worth; how much debt you have (including your credit card debt, overdraft, car, house, and other types of loans); how much money you will have once you have paid all your expenses and all your debit orders have been executed; and how much you’ll need to get to your next payday pushes you toward better money management.

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For example, the FNB app’s nav»Money feature is a free money management tool that includes features like savings goals, free credit status updates, and automatic categorization. monthly expenses to help customers spend and save money more consciously.

Does it work?

According to the figures that FNB provided us, this is the case. “Individual customers who use nav” Money on the FNB app are 23% more likely to improve their credit status, 30% more likely to honor their debit orders, and 16% more likely to start or increase l ‘savings available,’ explains the bank. ‘Results are based on the money management behavior of more than 2 million active users of the nav’ Money feature over a 12-month period.

Advice, money, finance, credit score, debt, credit rat

A total of 2.5 million FNB customers use the money management tool.

Advice, money, finance, credit score, debt, credit rat

14,000 active savings goals have been set up by users of this feature, totaling R528 million.

Nedbank’s banking app has a similar feature called Money Tracker which offers Personal Financial Management (PFM). Over the past few years, Nedbank has seen its number of digitally active customers grow to 2.3 million.

What is Personal Money Management?

“PFM is the use of technology and digital platforms by clients to manage their money and financial well-being, towards achieving their budget dreams and aspirations,” Chief Strategy Officer Tawanda Chatikobo told Drum. and digital innovation at Nedbank RBB.

“Essentially, PFM works by using a customer’s banking and financial data and highly specialized software enabled by artificial intelligence (AI), to understand their financial behavior and nudge them toward actions and behaviors consistent with their goals. individual.”

“This is achieved through tools such as expense tracking, budget tracking and savings analysis. Nedbank recently launched its own PFM solution, Money Tracker, giving clients the 24/7 power to track their money, understand spending habits, monitor their budgets and save money.

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2021 saw a 44% growth in savings accounts opened through the Nedbank Money app.

Does it work?

“Over the past few years, Nedbank has seen its number of digitally active customers grow exponentially to 2.3 million, with a significant majority using the Nedbank Money app as their preferred banking choice. This digitalization means customers can save more easily, with just a few clicks needed to open and fund a savings account and set desired goals,” says Tawanda.

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“Further evidence of this shift in customer behavior can be seen in the 44% growth in savings accounts opened via the Nedbank Money app, in 2021, with further growth expected in the future.

“Another vector of behavior change has seen customers begin to use digital platforms to actively manage their health and credit profiles.”

“A good credit score is essential to good financial health, and customers can use Nedbank’s digital platforms to easily view their credit score, but more importantly understand how their credit habits affect it, learn the right behaviors to improve and, ultimately, to enjoy good financial health.