Some people can manage their personal finances with ease, others can not. This task becomes even more difficult with the hectic rhythm of the work-life schedule, the rising number of income sources, and financial responsibilities. Add to these the coronavirus-related economic crises of 2020 and progressively tightening budgets. That is why this year, more and more people download various money management applications to control their costs, set financial goals, and make informed purchasing decisions, and this tendency isn’t likely to change much in the coming 2021. Having said that, the number of online tops and debates about what personal finance app is better, signify that despite the existence of leaders, a universally liked app of this category doesn’t exist and their users are in search of new solutions that would meet their needs. Which means that there’s an opportunity to build a personal finance app that would find its way to millions of users.
In this article, we’re going to focus on the subject of personal finance app market analysis and why it’s a great time to create a budgeting app today. If you want to learn more on the subject of money management app development in general, read our guide on how to build a personal finance app.
Why budgeting apps are worth it
Personal finance apps (also called budgeting, money management apps, or Personal Finance Management (PFM) solutions) are mobile software that helps you put your financial things in order. That is, to track all movements of funds, present charts and graphs that show you exactly where the money is going, calculate your budget for several months or even years in advance, and more, depending on the particular product. The main goal of such software is to help instill a more holistic approach to money-spending and thus help consumers have better financial health.
So are money management apps useful? Well, according to one of the reports by Javelin Strategy & Research, bank customers who use money management tools are 18% financially secure than those who don’t.
That being said, there are several ways to keep track of your expenses:
- Some people (especially those who don’t feel comfortable giving third parties access to their financial data or members of older generations) still prefer the pen-and-paper approach.
- Some say that banking apps are enough for them or use other kinds of financial applications to keep track of their expenses like payment systems. For example, Techcrunch states that Google Pay is about to launch a major redesign with a new emphasis on personal finance.
- Others use Excel. Actually, according to Insider Intelligence, 17% of consumers use Excel sheets for this purpose. What’s more, last summer, Microsoft even added a feature to Excel that can connect to bank, credit card, investment, and loan accounts and keep track of personal finances.
- Still, it looks like there is nothing that can compete with personal finance apps in terms of versatility, usefulness, and personalization.
Banking applications may vary in functionality but what they usually do is just count your expenses. The idea behind the apps for personal finance is to give you the ability to plan expenses and see how much and when there will be money in the accounts to know what amount of available money you can spend right now on early repayment of a mortgage, for example. Add to that different cards, e-wallets, cash. Personal finance apps can accumulate all the data in one place for you to have a clearer picture. Without such centralized accounting, you cannot perform a thorough analysis, check out the common balance, and so on. Not speaking about the ability to have joined accounts with your partners or family members.
PFM solutions are also especially appealing to younger consumers. According to Business Insider, two-thirds of millennials want to have as little to do with bankers personally as possible. At the same time, half of them don’t manage their finances altogether which implies great opportunities for the providers of PFM solutions seeing how millennials are now entering their peak spending years.
Financial applications in general are having great traction. Interest in fintech products became clear in the first half of the 2010s when banks began to develop their own apps and mobile services. So the fintech startups began to appear featuring fresh and innovative ideas. Now 63% of users have at least one financial app on their phones with 17% having at least one stand-alone budgeting app. That’s why the development of mobile and web applications targeting B2C audiences should be part of the plans of any bank or financial company to achieve a positive customer experience.
Personal finance app market statistics
According to a report by Liftoff and App Annie, users turned to finance apps more than 1 trillion times in 2019. Money management apps in particular have experienced a 20% increase in monthly active users.
So how big is the personal finance software market? As claimed by Allied Market Research, the global personal finance software market size was estimated to be over $1 billion last year and is believed to size up to $1,5 billion by 2027 with a CAGR of 5.7%. If you take the United States individually, the budgeting software market size there was judged to be worth $343 million by 2026 with a CAGR of 5%.
As stated in the AppsFlyer’s report, finance apps altogether experienced a 25% sharp rise in popularity between 2018 and 2019 emerging as the sixth-largest category for total installs. What it means is that there are plenty of opportunities for innovation and the introduction of new players to the market.
Why personal finance app development is beneficial for your business
So, in essence, making a personal finance app is a great idea for users as well as for business owners and startup founders.
Benefits for customers
- Convenient and simple control over income and expenses.
- The ability to plan a monthly budget and large purchases.
- A reminder of mandatory payments, fines, taxes.
Benefits for businesses
- The ability to tap into this market offering handsome profit potential
- Opportunity to create something new that a lot of people would find the best way to make their lives better.
- The ability to learn and use some of the current technologies like AI and AR that the financial sector is swiftly adopting.
Personal finance app market growth factors and hindrances
The Allied Market Research has The main growth factor of the PFM software market is the rising necessity of a more developed approach to track and manage expenses that many people feel nowadays. Moreover, the continuing digitization of financial services that was majorly kick-started during the first months of the pandemic also plays its part. Not to mention such global factors as the rising number of internet users and people who regularly use mobile applications.
Major concerns that can be regarded as hindrances to the growth of the money management app market include security issues which are the main reason why as many people avoid using financial apps altogether for the fear of their personal data getting stolen.
Personal finance app market tendencies
There are new directions that are developing and worth your attention if you plan to attract your target audience with a modern approach.
What people value in personal finance management solutions are their round-the-clock availability and technological stability. What it means for you is that to create a competitive solution and keep it that way you need to invest in technology, i.e. the renewal of old and outdated IT systems and adoption of modern approaches and reliable third-party solutions. Including the changes that have to be introduced to the product UI and UX.
Personal finance app market geography
As stated in the report by Allied Market Research, the main player on the budgeting app market in 2019 and 2020 was North America which is also expected to hold this position in the near future. This is due to the fact that the main companies that develop the globally acclaimed personal finance software like Mint or YNAB, are already situated in the USA.
Other factors that explain the North American region’s popularity are the technological advancements and the speed of their adoption of new and existing digital financial products.
However, thanks to the flourishing technological infrastructure and considerable investments, experts expect the Asia-Pacific region to lead in terms of the swift adoption of financial apps of various kinds, including the apps for finance management. It makes this region a ground with some ample opportunities for market growth, plus the skyrocketing internet and mobile penetration. For example, in China, mobile payments were worth a staggering $17 trillion in Q3 2020 alone.
COVID-19 impact on budgeting app development
With the unemployment numbers rising and the economic repercussions of COVID-19, people all over the world were forced to re-evaluate their spending and planning habits. Today more than ever, it made them seek solutions among mobile apps with the potential to help them manage their budgets better.
The pandemic took its toll on almost every industry. However, those digital product developers that will endure in the coming years, will face new opportunities for development and profitability. It looks like the pandemic, being a unique experience for the entire humanity, reframed the way society behaves in many aspects from new working culture to the explosion in e-commerce providers popularity, to making the digital-only the new norm for financial services. The phenomenon of “neobanks”, i.e. the banks that operate solely digitally, is taking the world by storm and is popular among Millenials and Gen Zs. So it seems that disruptive players, armed with advances in technology, will win in the post-crisis era.
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