Personal Finance Goes Mobile
By John Moore for Digital Innovation Gazette
Personal finance apps let people extend their banking arrangements into the mobile world, allowing them to check account balances, transfer money and review transactions.
A new developer competition, however, hopes to cultivate a somewhat different set of mobile finance apps. The Financial Capability Development Competition, or FinCapDev, aims to help consumers who may lack access to the full complement of financial products and services. The D2D Fund and the Center for Financial Services Innovation (CFSI) sponsor the challenge, which kicked off in October. The two organizations previously collaborated with the Treasury Department on the MyMoneyAppUp Challenge. In the FinCapDev challenge, developers selected as finalists will qualify for a cash stipend and free evaluation licenses to Yodlee`s SDK. Finalists will present their apps in June 2013. Tim Flacke, executive director of the D2D Fund, describes the challenge and its objectives.
How did FinCapDev come about?
Tim Flacke: Two themes gave rise to this challenge: one is the revolution in mobile technology. Mobile devices are absolutely ubiquitous now. Mobile technology creates new opportunities in products and services -- including financial products and services.
The second major theme is that there continues to be a huge need around building America`s financial capabilities. The financial crisis showed how easy it is for even pretty large swathes of the country to make choices that don`t lead to good outcomes as households, as communities and as a country.
An FDIC study says a quarter of the population of this country -- tens of millions of households -- are unbanked or underbanked. They are not using the mainstream banking system or they are using it but not as their primary financial management strategy. Instead of having a checking account, they are walking into a check casher and converting checks to cash for a fee. They are using payday loans instead of credit cards for credit needs -- interest rates can annualize into the triple digits.
On the one hand, we have a real need for greater financial decision-making skills. And on the other hand, we have this revolution in technology that is spreading into every segment of society. We thought there has to be a way to drive innovation that captures those two themes. We wanted to bring in a wide range of players -- not just rely on established firms or government agencies to innovate, but really cast a wide net. And that led to the challenge design.
What is your goal with FinCapDev?
T.F.: We want to help people save more money, borrow more cost effectively, and protect what they have. Those are the basic financial functions and we think there is no reason mobile can`t achieve that.
Are most developers not addressing the needs of the unbanked and underbanked?
T.F.: Many of the most talented in developing mobile apps are frankly in high demand. They have a lot of different opportunities and haven`t yet fully focused on this particular part. We can shine a spotlight on these issues.
Many personal financial apps come from the banks themselves and are geared toward their customers. Is that another reason for that lack of focus on the unbanked?
T.F.: If you look at the top ten financial apps in the App Store, they are dominated by mobile extensions of long-standing online banking properties. All of that is great, but part of our theory is there are other forces that drive innovation. We would like to see the other parts of the ecosystem have a little more role to play.
As you noted, developers have a range of apps they could be potentially pursuing. What incentives are you offering developers?
T.F.: It`s a nice cocktail of incentives: There is a prize for those who make it though the first round of the competition, some financial assistance to help with the development costs and a nice network of partners. Building a financial app often requires working with large and intimidating business partners that can be hard to reach. So far we have Facebook, Mastercard, H&R Block and Yodlee. We facilitate the task of making connections with some of these potential partners. It`s a chance to have a couple of hours of consultation that can help you think about what you are trying to achieve with an app idea.
What did you learn from the earlier Treasury Department challenge?
T.F.: What struck me as we sat in the Treasury Department, where we had the final presentations, was not the theme of the ideas but more that the people who were finalists, as a rule, seemed to have arrived at their ideas based on firsthand, personal experiences. I think it`s cool if what we are doing through this challenge is creating a way for these nuggets of consumer insight and consumer experience to find their way into app designs.