Money Dashboard and the rise of open banking

A recent report from 11:FS highlighted that 89% of UK consumers are trying to actively manage their finances using a variety of tools, ranging from the age-old pen and paper method to the newly emerged open banking-powered digital money management apps.

It's early days for digital money managers, but it appears that we have now hit a tipping point with 14% of the population reportedly having tried one. Demand is particularly high among younger people (aged 21-37) with 62% of them using a personal finance app, versus just 10% of those aged 54 and above.

So why are young people turning to apps such as Money Dashboard in such large numbers? For a generation that's weighed down by student debt and the high cost of renting, nevermind saving for a house deposit, the answer is simple: they want to master their money so they can live better.

At Money Dashboard, we’re working to solve this problem by making it easier for people to keep track of money stored in multiple places, as well as empowering them to make progress towards their goals through budgeting and planning.

Researchers at Harvard Business School and Edinburgh University recently found that Money Dashboard was saving the average person in excess of £200 per year in their discretionary spend, simply by showing them a true, more holistic view of their finances. Not only that, they also found that users who logged in more regularly were more likely to comply with their budgets on a regular basis, as well as avoiding spending traps like the so-called ‘payday’ effect - the tendency to spend more in the days around a salary payment.   

This extra control and awareness that customers gain from using services like ours mean that they ultimately save more money and then have a new, more positive problem - how do they maximise the returns from their savings?

In a recent piece by the Financial Times, it was argued that young people have been disenfranchised by the current financial system, and as a result are moving away from what was the favourite asset class of the baby boomer generation - property. Instead, three quarters of young Brits are now buying shares and investing in alternative forms of finance (such as equity in all of the exciting businesses on Crowdcube) rather than property, and 50% of homeowners surveyed recommended that those who are renting continue to do so.

That trend is echoed by the behaviour we see in our users when choosing to spread their assets. The decision to launch our most recent integration with cryptocurrency broker Coinbase was backed by thousands of Money Dashboard users who are transacting in crypto. You just need to look at the meteoric rise of Coinbase’s own service (with reportedly over 13m users) to see the growing demand for crypto access.

As well as crypto, this generation is also turning to alternative asset classes like equity crowdfunding. In under 12 hours from the launch of our Crowdcube campaign, more than 1,000 users had collectively invested £2 million in our business. This shows a strong belief in our vision to create a world-class finance app that can help millions look after their money, while also empowering them to build a diverse asset portfolio.

Amplifying this trend, the incumbent banks have been inherently slow to embrace the product innovations that young people now demand, which is partly why new “tech-first” challengers have seen such strong early adoption. One example would be the popularity of the no-nonsense, mobile-first current account from Monzo, which recently announced that it had reached over 2 million users.

However, Monzo is not alone. Money Dashboard users are making use of the offerings from Revolut, Starling and others who have all seen customers deposit money in their hundreds of thousands. There is a lot of choice out there, which is good news for consumers. It does, however, create a need for a way for consumers to keep track of where their money is and how they’re choosing to spend, save and invest it.

Open Banking promises to deliver the product innovation this group of savvy consumers expects. By freeing up the data we create, and making it portable among the provider or third party we choose to store it, Open Banking allows consumers to be truly free in what products and services they use.

There is a large and growing number of young people who no longer want financial advisors, but do want to make good decisions. They need a holistic view of their finances so they can make these decisions themselves and choose the products that are right for them.

We believe Money Dashboard is operating in an extremely exciting space, and that the timing couldn’t be better to allow our users to join us as investors in this funding round. We look forward to developing new products and services that allow users to maximise their wealth while also working hard to achieve our targets.

Capital at risk. Investments of this nature carry risk to your capital as well as potential rewards.

Steve Tigar

Guest author: Steve Tigar CEO at Money Dashboard

Entrepreneur at two scale-up tech businesses, and a successful career in advertising developing award-winning campaigns. Previous venture culminated in strategic partnership with the Zoopla Property Group.