US comedian Steven Wright once quipped: “I saw a bank that said ’24 hour banking’— but I don’t have that much time.” Even if a service is always open, what if you can’t find space in your schedule? Research from the UK regulator suggests mobile banking apps and alerts might be an answer to the comedian’s problem. The 2015 report by the UK’s Financial Conduct Authority (FCA) is here.
Mobilise your banking – anywhere, any time
It can be tough to keep track of all the things we should do. It’s not unusual for payments, as well as less urgent tasks, to sometimes fall by the wayside. Our nine top tips for banking on the go, drawing on the FCA findings, follow.
1. Do set up text alerts from your bank to tell you how much money you have in specific accounts. A quick reminder that we may need to pay additional fees can help us stay on track.
2. Don’t wait to make changes until next week, next month, or next year. You will reach your target eventually by taking small, steady steps, even if it seems a long way in the future.
3. Do follow up any text alerts by using a mobile banking app to take action. The FCA found that people who used mobile apps (downloaded on their mobile devices) to support text alerts slashed their overdraft fees by 24%. The FCA said those who only used SMS alerts saved just 5% off their accidental overdraft fees on average.
4. Don’t think mobile technology is not for you. The research found that those on higher incomes or aged 40 to 59 could save even more. The FCA suggested that people in these groups are more likely to be busy, with less time to manage their bank accounts.
5. Do view your improved financial position online or with a mobile app. This simple act can feel quite satisfying – and act as a small feedback loop. Another way to reinforce your progress might be an SMS alert that tells you when you reach your financial target.
6. Don’t neglect better banking products or services as they become available. Why miss out on opportunities to earn more? Perhaps a different account – or bank – offers more compound interest. The FCA study found that only 1.8% of people switch bank accounts each year, although many are not happy with their existing bank.
7. Do set up an automatic savings system. Make what you want to do automatic. Instruct your bank to deposit some money automatically into your savings account every pay day. This then becomes the easy default option.
8. Don’t ignore your annual banking summaries when they arrive. The FCA found that annual summaries weren’t having much effect on banking behaviour, but these notifications could still at least be filed for future reference.
9. Do plan out your finances. An eZonomics poll found that only 67% take the time to regularly plan and monitor their finances . You could also include data from your annual statements – perhaps by using a mobile app.
Why mobile apps?
Whatever we need to do “there’s an app for that”, as they say. Apps that are specially designed for mobile devices have emerged as a key way to bank on the go, compared with using your bank’s website.
Other research, including a 2010 US National Bureau of Economic Research study, also shows how reminders can help people save money. The ING International Survey: Mobile Banking, New Technologies and Financial Behaviour 2015 found that mobile apps, especially from your own bank, are getting more popular in Europe.
Money apps beyond banking
There are lots of apps and websites that can help you do your budget or manage your bills. Some can combine data from all your accounts to give you a quick view of your financial position, anywhere, anytime.
It can be difficult to keep track of our money. Often, a little nudge is all it takes to keep us on the right path.