Recently, a user posted on a Facebook group about how small payments were clogging up his main salary account, making it difficult for him to track his spending. He said he was considering opening a second bank account, exclusively for his expenses.
While it’s always possible to reconcile all expenses manually, it takes a lot of time and effort. “Most people don’t need more than one bank account but end up with multiple accounts because they open a new one every time they change jobs, or just at different stages of life. This usually results in fragmentation of spending and balances between these accounts, which can give users a very confusing picture of their finances,” says Sumit Gwalani, co-founder of Fi, a financial services app.
The other option is to use personal finance apps, available for Android and iOS users. Apps such as Fi Money, Jupiter, Fam Pay, myBillBook and others aggregate all expenses and sources of income for easier reconciliation.
“These applications give real-time visibility into income (revenue), expenses, investments, and profit or loss. This helps in keeping track of accounts payable and receivable for each customer and vendor (if applicable). invoicing, payments and more help prevent errors and save time, which improves efficiency,” said Rahul Raj, Founder and CEO of FloBiz, an India-based neobank and owner of the software. cloud-based accounting software myBillBook.
Some of these apps have been officially licensed to run on account aggregator framework. This means that these applications, with the consent of their users, can retrieve details of bank accounts and investments according to the user’s preferences. This can help you get a complete picture of your expenses and investments.
Let connected accounts sort you out 🔆
Once you connect your bank accounts to Fi, you get an accurate overview of your balances and expenses in one place 🚀 pic.twitter.com/bdzH4WK3Dv
— Fi (@Bank_on_Fi) May 26, 2022
What are the benefits?
“Connecting their accounts will give users a complete view of all spending and balances across all accounts and an accurate picture of their liquidity. This will eliminate the need to check multiple mobile banking apps and, in the longer term, lead to better financial decisions,” says Gwalani.
Some of these apps go even further to create expense analysis reports, expense forking, and other data reports to help users understand the nature of their expenses.
This will be useful for users who already have multiple bank accounts and need to check their balances regularly.
“Account aggregator-enabled personal finance apps can help users with multiple bank accounts track their balances without switching apps,” says Nikhil Kurhe, CEO of Finarkein Analytics, a data analytics company.
Since all of the consolidated bank details of multiple banks will be visible to the user in a single application, tracking becomes easy. Some of these apps also give users a detailed statistical analysis of their spending habits.
“Financial apps can aggregate all financial data in one place and then create a report based on it. Users can view this report to better analyze their finances and expenses,” Kurhe adds.
These apps can also be used to track investments across multiple folios.
“Connecting multiple bank accounts can also improve fraud detection and prevention standards. Although each bank has its own measures in place, a security agency can add another layer of protection that can span multiple user accounts. The AA framework can enable real-time monitoring on all accounts, which can improve security standards in banking,” adds Gwalani.
Things to watch out for
While these apps are useful, they can leave you vulnerable to scams if you’re not careful enough. To get started, it is important to download the correct version. It’s best to stick to apps that fall under the Account Aggregator (AA) framework.
—Android (@Android) May 17, 2017
Android users should always use the Google Play Store with “Play Protect Secure” settings to only download the right app.
“Google Play Protect checks your apps and devices for harmful behavior. It runs a security check on apps from the Google Play Store before you download them. It also checks your device for potentially harmful apps from other sources. These harmful apps are sometimes referred to as malware,” reads a Google post.
For iOS users, Apple has similar cloud-based protection, but it might be best to use an antivirus or anti-malware app to regularly scan your phone.
While iOS users were unable to use most of these apps due to strict privacy standards, the AA framework solved the problem for them.
Since you consent to share your financial data with different aggregators, data privacy issues also come into play. The AA rules specify that aggregators are not allowed to store, process, or sell the data. You can also withdraw your consent for account aggregation at any time, even if you are live with the corresponding application.
In addition, AA participants will soon be subject to revised data governance guidelines from the Department of Electronics and Information Technology. While this may provide some degree of data protection, until then you should carefully assess whether you are concerned about data privacy.