September 06, 2016

Personal finance Apps for Indian investors - far and few

A feature story I wrote in FC a couple of days back -

Personal finance Apps for Indian investors - far and few

Money management or personal finance management is not just about
investing. There are other critical elements involved as well. It includes
the management of your money outflows through spending. It also covers the inculcation of a habit of monitoring of your total financial networth on a
regular basis.

If not monthly, you should monitor you financial networth on a quarterly or
yearly basis at the least. This should be a comprehensive monitoring
encompassing two main elements – one, a categorywise break-down into
investments, cash-on-hand, bank savings and deposit account positions; and two, an asset-class distribution of your savings and investments.

There is no dearth of web portals and mobile phone apps offering you
advanced features to help you invest across asset classes such as equities,
debt and gold and platforms such as stock exchange trading and mutual funds. These portals and apps not only give you the ability but also spare no
effort in providing every bell and whistle in their offerings.

No after-sales service for investors

But there is a short supply of advanced portals and apps offering
post-investment money management or advisory tools. A vast majority of
brokerages, including the large ones who are otherwise technologically
advanced, do not help much in this vital sphere, and neither do the large
banks. Their current features in post-investment personal wealth management apps are very raw, and do not go beyond the raw basics.

But in the last one year a beginning has been made ith a handful of firms
(brokerages, firms and information technology startups) beginning to offer
mobile apps  and web-based apps which allow users who download them to keep
an eye on a large gamut of their personal finance lives.

According to Rahul Jain, executive vice president-personal wealth advisory
at Edelweiss Broking, "A lot of our personal wealth advisory clients were
coming back to us and telling us that while they were getting a lot of
advise on where to invest no one was telling how their investments were
doing and no one was providing them advise on risks seen from an entire
personal finance perspective." Jain said he and his firm realised that they
had to couple their existing advisory tools with with an expense-management
tool or a money manager application to make their advisory service more powerful.

Concurs Amar Choudhary, CEO and co-founder, Finaskus, a firm providing
automated financial planning and investing service for retail services.
"Investors are increasingly seeking awareness of not just the returns they are getting from their investment and but also how their investments are doing in different cuts," says Choudhary.

What the Apps do?

Financial Chronicle Research Bureau takes a look at the features being offered by a few of the new breed of technology-savvy firms which have taken the lead in post-investment and personal finance management arean. So
far, these money manager Apps are smartphone based applications available for download for phones running on Android, Apple and Windows platforms. Web-based apps or portals are still not easy to find.

Walnut and Money View are two personal finance management mobile Apps which were launched last year with basic features which have got upgraded with some new features over the last one year. A couple of months back Edelweiss Broking went live with a free money manager App called WealthPack which works like an automatic money manager.

These are Apps developed by Indian companies incorporating the terminology and language used in the communication sent by financial or other companies in the domestic financial ecosystem. There are far more similar Apps globally targeting users of other countries. It is, therefore, important to
differentiate between domestic and international Apps.

Moreover, so far, these Apps are free. It is possible that they will become
chargeable in the future and to download them you may have to pay anywhere
upto Rs 300 or more, depending on the scale of the features offered and the
technology used.

The first and the foremost thing all these Apps do is scan through the text
messages (SMS) on your smartphone. The Apps' software then identifies the
SMSes which have come from your bank, brokerage firm, utility company,
credit card issuer, digital wallets (such as Paytm, MobiKwik), radio taxi
companies (such as Meru, Easy Cabs and Uber) and similar other entities.

After this, the features depends on the Apps' own programming strengths
kick based on the algorithms built into the software code of the App. The
Money View App, for instance, says it tracks your bank SMSes and tells you
where and how you spend your money. "With the daily expense manager, you
can analyse your spends using graphs and charts," it says.

The Edelweiss App has algorithms written to cover 50-odd banks and credit
cards. Apart from these, it covers billers such as Airtel, Vodafone, MTNL,
Credit Card Billers, MTS and others.

The Money View App says it also keeps track of your taxi, movie and train bookings, which the other two Apps would also end up doing as a part of their total offering.

According to Edelweiss' Jain, his firm's App aims to integrate their investments with expenses, and work out an advisory around it. "The spending pattern among many young people is that if they make, say, Rs 1.00
lakh they spend Rs 1.10 lakh," says Jain.

Picking up from the text messages in your smartphone, the basic framework
in these Apps allows you to see an overview of your expenses, investment,
inflows and account balances. Depending on each App's algorithms, the transactions are categorised automatically. That which can not be categorised are simply called 'uncategorised' which you can then edit and specify the category you want the transaction to go into.

"In our App, you can manually add your cash spends as well. You can even
change the categorisations if you think the App's algo has wrongly categorised it," says Jain.

The analytics abilities of any App can vary and watch out for these because
this is what caters to your primary purpose of understanding your personal
finances by going beyond a simple investments overview.

What you should demand from a money manager App?

A simple feature such as historical month-end values of bank accounts, and
monthly inflows and outflows is of great value for you if you want to
understand where your money is coming from and where it is going.

It is imperative that the App you choose should offer you charts or tables
which show a historical trend of your expenses, inflows and ATM
withdrawals. Some of the Apps available today are already offering
monthwise charts for a period extending upto six months. But a longer
period analytics is preferable and keep a lookout for an App that digs
deeper into the past and shows you the trend visually in charts.

Ability to export statements is also a must for any useful App. "We are
also going to soon add budgeting and goals in our App. You can tell the App
that you would not like to spend more than Rs 20,000 a month on restaurant
bills or you tell it that you a budget of Rs 1 lakh in a month," says Jain.
The App will send you alerts when your limits come close to being breached.

There are, however, severe limitations in what the Apps dependant on your
smartphone's text messages can do. It can not integrate your investment
holdings in your demat account for the simple reason that a vast majority
of depository participants do not send SMSes on the holdings value at the
end of a month or even a quarter. All you have is the trading portal from
where you can get this by logging in. There is no automatic seamless
integration so far.

Finaskus' Choudhary takes the expectation further and says, "It is nice for an investor to see how he has created total wealth over the last few months or years. But how about breaking down the trend by asset class?" Even within an asset class, it helps an investor to know how his direct equity investments are faring and how his mutual fund investments are faring

Analytics algorithms will be the new game changer for investors in their
personal finance management. Companies and banks in the domestic financial system are already spending significantly on analytics but with the sole objective for using it for marketing and pushing financial products.

Customer service for investors gets imparted secondary importance. But new tech startups which have made a lead through the money manager Apps such as Money View and Walnut are likely to expand their features and try and capture the missing elements.

In the payments world, the changes are more rapid. The banking regulator,
Reserve Bank of India, recently upgraded the payments ecosystem by going live with its unified payments interface (UPI) App which makes your
smartphone do things on funds transfer and other payments, which existing
digital wallet providers like Paytm are already offering in various forms.

Towards the end of last year, the Citi banking group convened developers
from India around the globe to unveil innovative digital banking solutions.
As per a press release issued by Citi in November last year, in India it
received a record high number of registrations for solutions ranging acrossbevery area of banking and financial technology including mobile payments, investment banking, wealth management, financial inclusion, savings and personal financial management.

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