I first began this article back in February and March before we really started to see the UK be significantly effected by COVID-19. I titled the article “Banking apps… So hot right now” (a little Zoolander reference for the film geeks out there), and at the time it was true.
Banking and money management apps were trying to become the next big trend. Whether I was reading an article, or watching a video on YouTube; I’d get an advert for one of these apps.
Most of these apps aimed to help people invest small amounts of their money, helping them potentially make a small passive income stream though return-on-investment.
Interestingly, a lot of the adverts I saw for these apps did avoid explaining that their aim was to invest your money into stocks and other assets, making it seem like the app focuses on saving you money. This was probably because telling people that you’re going to “invest” their money on their behalf sounds a bit dodgy.
How the app invests your money depends on which you use.
Moneybox, for example, rounds up the user’s purchase to the nearest pound and uses the excess amount to invest in stocks. So, if you buy a coffee for £3.80, Moneybox will take an additional 20p and invest it.
Those pennies do add up by the end of the month. So whilst Moneybox sounds like it’s taking a small amount, that can grow into a considerable sum of money by the end of the month. Like my parents always used to say, look after the pennies and the pounds will look after themselves.
Plum is a similar app, but works a little bit more intuitively.
Plum uses an AI to analyse how you spend your money, and suggests an amount to invest based on your disposable income. Additionally, the AI also finds ways for you to save on your bills.
Both apps use a friendly colour palette, likely inspired by Monzo’s success (which was largely due to its friendly design and “hot coral” debit cards).
The aim is to get people to be excited about saving and investing, who would ordinarily avoid those things like the plague. And, to be fair, they’re apparently achieving it. People were using the apps, and the brands seemed to be flourishing.
Of course, then COVID-19 began to turn the world upside down.
Following the stock market going a bit haywire in March and April, Moneybox received a lot of backlash from users who didn’t realise that their hard earned money was being invested in stocks, who then saw their money disappear overnight. The lack of clarity in the app’s advertising clearly was a double edged sword; increasing the app’s user count, but potentially misleading them in the process to think their money was secure.
It’s difficult to criticise what these apps were aiming to achieve, as they ultimately were attempting to help individuals invest their money sensibly. In the case of Moneybox, you could argue their advertising campaign was deceptive. Plum, though, were definitely trying to help individuals become smarter with their money, but the timing was just very unfortunate.
Previously, investing money was something that was inaccessible for the working class, but these brands were making them much more accessible. Whether they’re helping or hurting those people’s finances is up for debate following the volatility of 2020, but the intent was probably good and there is a potentially very powerful brand behind the apps.
The apps could allow its users to invest in property as a collective, or they could continue to invest the money how they have been in stocks and ETFs; there’s something behind the madness that could actually have a huge benefit for the working class.
Big news coming soon, so stay tuned and subscribe if you haven’t already! I won’t keep it too vague – I’ve got another book coming – but the release is sooner than you may think.