A little risk for good reward

I remember looking for finance apps on both Android and iOS a couple of years ago and finding some very nice looking ones like Mint.com. They gleaned information directly from your bank accounts and presented you with a picture of your spending habits against your budget, without you having to enter everything manually. The problem for me was that they were all US-only apps. Great idea, I thought, why can’t we have them here? Well, now we can: meet the automated budget and tracking app, 22seven.

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The basic idea of 22seven is that it plugs in to your bank accounts and reads the information there, pulling all the transactions into the app to do automated analysis. As a security feature, it’s impossible to perform any actions on your accounts using the app – this is a read only function. What the app then does is to sort your transactions into categories for you, presenting an automated budget (based on what you actually spend, not what you should be spending!) and tracking your progress against that. Once all the data has been pulled in, you also get two other views, namely your actual financial position at that point and a simple transaction list.

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You have the ability to define your own categories, or even change the default ones that have been provided. The app learns as it goes along, so repeated transactions from the same vendor are put into the same category going forward. It’s quite good at guessing what category your transactions should go into in the first place but, as with all these apps, does need a little management from time to time. It can’t tell, for example, whether that last R300 you spent at Woolworths should be classified as grocery or clothes shopping. But the amount of intervention needed by you is minimal and the fact that it automatically sets budget limits for you based on your last three months of spending is quite a bonus. Fortunately, you can go in and set your own limits for different categories of budget and the app will then track your spending against that.

22seven used to charge for its services – you got an initial 30 day free trial and thereafter it was R25 per month. That wasn’t an exorbitant amount compared to some other personal finance apps out there, but, happily, they have dropped even that charge and use of the app as it now stands is free across all platforms. I would guess that this represents a move to a freemium model, which means that there may be charges in the future for extended functionality, but we will have to wait and see how this develops.

There are some things that I really like about this app. First and foremost is the way that it gathers everything from all the accounts that I link to it. This means no more missing those small charges that don’t come through on my SMS notifications, or inadvertently overlooking something as I go through my monthly email report from the bank. Secondly, the automatic categorization of transactions works pretty well and saves a lot of time because I don’t have to classify every entry myself. Thirdly, the app is well laid out, visually pleasing and with information that’s easy to see and understand. Lastly, I like the fact that it is available across different platforms; it’s very convenient to be able to work on the Android version on my smartphone and then to pick things up again seamlessly when I’m at my computer.

Inevitably, there are some things I don’t like about the app. Chief among these would be the very limited reporting capabilities. There is no way, for example, to get a view (graphical or otherwise) of my performance over a period of three or six months. There is no way to get a consolidated view of expenditure in a particular category across all accounts for a chosen period, as I might want to do when checking all my medical expenditure in a particular tax year. Secondly, you can’t consolidate income and expenditure in a single category, which means that refunds/rewards for groceries don’t get accounted for in your monthly budget for that category. Thirdly, transfers from one account to another frequently get categorised as income rather than just transfers, which means having to edit things manually and losing the benefit of automation. Hopefully, these issues will be addressed in future updates.

Finally, any look at an app of this nature would be incomplete without addressing the elephant in the room: to give the app access to your bank accounts, you have to supply your banking username and password. 22seven go to great lengths to explain the extensive security measures they have put in place to prevent anything untoward happening as a result of this. It’s also comforting to know that they are owned by Old Mutual, as their concern with reputational risk will mean that security is taken even more seriously and that they would be more likely to cover you should anything go wrong on their side. Only more likely, mind you, because the limitation of liability and indemnity clauses in their terms and conditions make it pretty clear that they will be able to absolve themselves of any liability in the event that something does go very wrong.

There was a lot of resistance to 22seven at its introduction by banks and some other institutions, warning that you acted at your own risk if you supplied your username and password, some even saying that it was a technical breach of their terms and conditions. In later developments, some workarounds were found. FNB, in particular, have enabled a secondary, read only view into accounts with a completely separate username and password. Fortunately, I’m with FNB and this option, together with the security built in to 22seven, is enough to convince me I can take advantage of the benefits of using this app. If you’re with another bank, you might want to get in touch with them to see what they say and then make an informed decision.

In the end, this is an easy app to recommend. There is already great functionality built in and it’s likely to get better as development carries on. The only real hesitation is the security aspect. For FNB clients such as myself, the risk is considerably less and I am personally comfortable enough to use it; for others, you need to consider whether the measures 22seven have put in place are enough for you. Whatever your ultimate decision, the app is worth serious consideration.

4 thoughts on “A little risk for good reward

  1. Steve I am loving your work as I can feel that you care for those drowning in moniey matters: Some how it reminds me of that very popular car program with Jeremy somebody and his 2 friends trying out different cars and letting the public know there veiws…… Took me decades to became financially free then I was in a position to be brave and practice: ” to have give all to all” philosophy ie: sold my bakkie and walked the talk, haven’t looked back as I am following a different profet now. Hopefully this app can evolve and start monitoring how and on what people spend their energy and what the costs and rewards are on that spendature: what a great future awaits. Luv Diane

  2. Pingback: Even countries need a budget | The Money Thinker

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