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How personal finance apps can win with open banking

Personal finance is one of the most exciting and innovative spaces in European fintech, which in turn is the most exciting tech sector in the EU and UK.

personal finance management apps and open banking

New innovation is constantly appearing, with apps taking care of everything in personal finance from budgeting, saving, investing, and foreign exchange, to more standard neobank offerings.

However, there are a couple of challenges for players in this space. The first is the competition. It seems like almost every day, new entrants pop up with innovative new offerings, making it harder and harder to gain visibility and market share. And second, dislodging incumbents is very difficult. As the effort involved to switch your primary bank account is quite high, many consumers maintain a primary account with an established bank, even as they take advantage of specialised offerings for certain tasks such as budgeting or investing.

Access your users’ account information and differentiate your offering

The challenge for personal finance apps is how to create the best user experience and differentiate themselves in an increasingly crowded space.

If you work for a personal finance app, you are probably familiar with open banking, but just to briefly recap, the principle is that banks must – if requested and with consent - share account data with third parties such as personal finance apps. This means you gain a direct insight into your app users’ primary account, including transactions, balances, direct debits standing orders, and more.

With this data you can provide a range of insights and services for your users, such as:

  • Show how much room users have to save and invest.
  • Enable users to create and track savings goals.
  • Predict negative balance, so your users don’t spend on unnecessary things, or can take other action to avoid it.
  • Calculate the impact of increases or reductions in salary due to changing jobs, working less or more, or losing a job.
  • Provide cost comparisons so users can find better deals.
  • Calculate credit possibilities for users' personal or mortgage loans.

And many more.

Cross-sell, up-sell, and gain a 360-degree view of your users’ financial data

If your organisation is much larger than only a personal finance management app, there may also be possibilities to cross sell other services and products, such as mortgages, loans, savings accounts, and so on, depending on what the organisation offers.

And on top of that, you can aggregate information from many accounts – giving you a 360-degree view of your app users’ financial profiles.

Communicating the benefits and the security standards of open banking is critical

Open banking requires the consent of your users to share their banking information. And at a time when people are actively instructed to not share their bank information with anyone, this can present a challenge. To find out more about the regulations and technology that make open banking secure, download our white paper: Data security in open banking report, or contact us.

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