Can apps really help people save money?

This week is financial inclusion week, and as such we thought it a good opportunity to give an overview of one of our newest projects. For the past few months, the Bevan Foundation has been working on a project about Personal Finance Management apps (PFM apps), which you can read about here. These are apps designed to help people manage their money and the aim of this project is to explore the potential utility of these apps for people living on low incomes.

What are Personal Financial Management apps?

PFM apps refers to a range of apps that offer bank-like services but which are run by third parties i.e. they aren’t registered banks. The primary goal of PFM apps is to provide users information that will make managing their personal finances easier and more efficient. These apps offer a variety of services to allow users to manage their finances, including automated savings and money categorisation.

For example, some apps allow people to categorise their expenditure by different spending type, allowing people to place their money in digital “jam jars”. Others automatically round up transactions with the difference going into a savings account (for example if someone spends £9.75 in a shop, the app may round the payment up to £10, placing the £0.25 into savings. 

Why are we looking at them?

Personal Finance Management apps could offer a useful tool to help people better manage their money, but, with the technology still relatively new very little research has been undertaken into the sector. The one thing that the existing literature does suggest however is that the primary userbase of these apps are young men on middle-incomes, not people on low-incomes that could perhaps benefit the most. 

Given this dearth of knowledge we thought that it was vital that further work was undertaken into the challenges and opportunities that they could provide Welsh communities. Among the questions that we think merit further exploration are whether Personal Finance Management apps actually deliver on their promises and make it easier for people to build their financial resilience? If so, are they easily accessible by people on low-incomes who might benefit the most? Are the apps safe? What do they do with people’s money and is it held securely? What do they do with people’s personal data?

As the services offered by these apps become more popular and appear to be getting adopted by high street banks, the need to engage with these questions has never been greater.  That is why we are working with experts and communities across Wales and beyond to explore how these apps can be made to work for people on low income. 

Next month we will be holding a roundtable event for people working in financial inclusion to explore these apps further. If you or your organisation wish to be involved then make sure you contact us and we will get an invitation sent over to you.