Few people enjoy managing money, but once feared tasks such as creating a budget, tracking spending and saving money have never been easier to accomplish thanks to the explosion of personal finance mobile apps. Whether you’re using them to help track your budget, set savings goals or plan for the future, these tools have changed how people think about, and interact with, their finances. But what is fueling the rapid growth of this market, and where is it heading?
Why Personal-Finance Apps Are Winning
The personal finance apps market is booming, and for good reason. Here are some of the major factors contributing to its growth.
Greater Financial Education Required
A whopping 64% of Americans are living from one paycheck to the next, according to a study by Lending Club. People are looking for ways to better handle their money amid economic uncertainty and increasing inflation. Personal finance apps provide users with a simple, easy-to-use tool for taking control of their bank accounts, credit cards and other financial assets from budgeting to loan repayment.
Digitization of Banking
Rapid growth in online banking has helped make finance apps mainstream. These apps automatically talk to digital bank accounts, and enable users to tie together bank accounts, credit cards, and investments into a single, clean interface. Convenience is king, and people today expect to be able to access their financial data 24/7.
The Millennials and Gen Z Are Leading the Way
It is millennials and Gen Z that are doing the most using finance apps. They came of age in a world that was saturated with smartphones, and have little patience with non mobile-first solutions to problems in any sphere of life. For them, to use an app to split a bill, set a financial goal or invest in the stock market is nothing short of breathing.
Integration of AI and Customization
Artificial intelligence (AI) is also a significant catalyst for growth. Current finance apps deploy advanced algorithms to analyze spending habits, send bill reminders and even offer financial advice on a tailored basis. And AI-enabled budgeting tools, including You Need a Budget (YNAB) and Pocket Guard, provide a tailored fit that hits home with those looking to spend money better.
Common Features in Personal Finance Apps
Various apps serve specific areas of personal finance, but the most popular ones have several strong characteristics in common.
Budget Tracking
Budgeting is the bread and butter of finance applications. Apps like Mint or Every Dollar categorize users’ expenses for them and even provide suggestions on where they’re spending too much money. These apps remove the guesswork from budgeting, making it simple and accessible for all.
Savings Goals
If you’re saving for a home or vacation or just trying to stash away cash for a rainy day, personal finance apps like Capital can help make it easier by automating the saving process. Many apps round up purchases to the nearest dollar, then transfer the difference into a savings account, so you’re saving almost without realizing it.
Investment Management
Apps such as Acorns, Robinhood and Stash have democratized investing. They demystify complex topics like ETFs, stocks and bonds, and they lower the barriers to entry with fractional shares and micro-investing.
Debt Payoff Tools
Keeping up with your debt can be an overwhelming task, but apps like Tally and Debt Manager are trying to make it as easy as possible. They crunch repayment plans for users, in some cases prompting them to go after high-interest debts first in order to save in the long run.
Security and Integration
Top apps prioritize security, given the sensitive financial information at stake. Two-factor authentication, biometric logins, and encryption are must-have items. Users also benefit from seamless integration with the most significant banks and fintech.
Barriers to Entry in the Personal Finance App Market
But as the market flourishes developers and companies are running into a few headwinds.
Privacy & Data Security Issues
Doing anything with sensitive consumer data is a big responsibility. That means companies need to adhere to a patchwork of strict rules such as GDPR, or else win the trust of users. Some data breaches could be catastrophic for the brand and reputation.
Overcrowded Market
Personal finance apps are a crowded place. With so many apps competing for download, differentiation is going to be determined by unusual features, excellent user experience, or deep functionality.
Financial Accessibility
Although these apps are designed to democratize personal finance, that does not mean that everyone can fully benefit. Those with no steady smartphone access, bank account or financial literacy could be sidelined. It is a challenge to reduce this digital divide.
User Retention
A lot of people download finance apps with noble intentions, only to not follow through with them. This is the reason why churn rates in this space are high, it’s imperative that developers focus on usability, engagement, and long term value.
The Best Personal Finance Mobile Apps of the Future
What is next for this rapidly growing industry? Here are a few prognostications about the future of personal finance apps.
Hyper-Personalization
Never mind one-size-fits-all fixes. The future personal finance apps will apply sophisticated AI and machine learning to provide very personalized experiences. Budgeting tips, investment suggestions — you name it, these apps will customize the advice to users’ individual financial situations in real time.
Collaborative Platforms
Instead of standalone tools, these future apps will be platforms that connect to other fintech services like robo-advisors, payment systems, and even cryptocurrency wallets. This partnership shall make financial management easier for users.
Gamification
We expect to see an increase in popularity of gamification components rewards, badges, streaks. Making money-management more fun and interactive encourages users to remain dedicated to their financial objectives.
Sustainability Features
As consumers increasingly prioritize sustainability, apps may begin rating purchases according to their environmental impact, so users can align their spending habits with their values.
Voice and Chat Interfaces
AI in voice assistants and chatbots will improve the experience of end-users. Imagine asking your finance app, “How much money can I spend on eating out this weekend?” and receiving on-the-spot response according to your budget.
Take Charge of Your Finances
The personal finance apps mobile ecosystem is a huge move forward in the freedom for people to manage their money. These apps, from intuitive budgeting tools to frictionless investment platforms, are transforming financial literacy and encouraging people to become smarter with their money.
If you haven’t already, this is a great time to browse through these tools and see which app best meets your financial goals. Curious to learn more? Keep a close eye out on the trends we’ve described today and be sure to download a personal finance app to discover what a difference it can make in your financial life.
