Can mobile banking apps be effective ‘personal financial managers’? We navigate two popular ones

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

Yes, it’s about transactions. Easier, quicker, more convenient transactions that just a few years ago would have required you to go into the bank branch and wait in long queues to do.

With the rising usage of smartphones, apps have changed our relationship with banking allowing us to download bank statements, send money and make payments in real time, open savings or investment accounts, apply for loans, track spending, reverse suspicious transactions and debit orders and lower or increase our credit limits instantly. Some are even zero-rated, saving us on data. In short, banking apps make life easier for us and save us time.

But do they change consumer behaviour in ways that help us save money?

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

What is money 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, home and other types of loans); how much money you’ll have after you paid all your expenses and all your debit orders have gone off; and how much you’ll need to make it to your next payday, that’s nudging you towards better money management.

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For example, the FNB app’s nav» Money functionality is a free money management tool that includes features such as saving goals, free credit status updates and automatic categorisation of monthly spend to help customers spend and save money more consciously.

Does it work?

According to the numbers FNB provided us, it does. “Individual customers who use nav» Money on the FNB App are 23% more likely to improve their credit status, 30% more likely to honour their debit orders and 16% more likely to start or increase savings on hand,” says the bank. “The findings are based on the money management behaviour of more than 2 million active users of the nav» Money functionality over a period of 12 months.”

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A total of 2,5 million FNB clients use the money management tool.
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14 000 active saving goals have been set up by the people using this feature, totalling R528 million.

Nedbank’s banking app has a similar functionality called Money Tracker that offers Personal Financial Management (PFM). Over the past few years, Nedbank has seen its number of digitally active clients grow to 2,3 million.

What is Personal Financial Management?

“PFM is the use of digital technology and platforms by customers to manage their money, and financial wellness, towards realising their fiscal dreams and aspirations,” Tawanda Chatikobo, Head: Digital Strategy & Innovation at Nedbank RBB, tells Drum.

“Essentially, PFM works by using a customer’s banking and financial data, and highly specialized artificial intelligence (AI) enabled software, to understand their financial behaviour and nudge them towards actions and behaviours in line with their individual goals.”

“This is achieved through tools such as spend tracking, budget monitoring, and savings analysis. Nedbank recently went live with its own PFM solution, Money Tracker giving its customers the power, 24/7, to track their money, understand spending patterns, monitor their budgets, and save.”

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2021 saw a 44% growth in savings accounts opened via the Nedbank Money App.

Does it work?

“Over the past few years, Nedbank has seen its number of digitally active clients grow exponentially to 2,3 million, with a significant majority using the Nedbank Money App as their preferred choice of banking. This digitization means customers can save more easily, with only a few clicks required to open and fund a savings account and set desired goals,” says Tawanda. 

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“Further proof of this customer behavioural change can be seen in the 44% growth in savings accounts opened via the Nedbank Money App, during 2021, with more growth expected going forward. 

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

“A good credit score is central to good financial health, and customers are able to use Nedbank’s digital platforms to easily view their credit score, but most importantly understand how their credit habits impact it, learn the correct behaviours to improve it, and ultimately to benefit from good financial health.”

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