MoneySmart does what it says on the tin

Free personal finance management (PFM) platform, MoneySmart joins 22seven and Nedbank’s ‘My Financial Life’ in aiming to change the way South Africans think about and handle their money.

MoneySmart is an independent, online personal finance start-up that was founded in August 2010 and has developed a financial management service which has been in beta testing since November 2011.

Like 22seven, MoneySmart is an online tool which users can use to view and assess their financial habits and get to grips with how they spend their money.

BusinessTech sat down with MoneySmart CEO Tobie van Zyl and CTO Callan Vorster to better understand how the new service aims to set itself apart in a market suddenly inundated with similar products.

Callan Vorster (CTO) and Tobie van Zyl (CEO)

How it works

The platform works by allowing users to set up an anonymous account that syncs with their banks and credit providers.

Users sign up by creating a username linked to the email address of their choosing – this identity is then linked to the information pulled from data aggregator, Yodlee, which is given a “ticket” of permission to access financial data from a user’s banking or financial institution once it has been added and cleared by the user.

Users are then able to upload their bank statements manually or automatically and then have access to insights regarding their transactional history; set financial goals; track spending trends; and what the MoneySmart executives peg as a key component of their service: get information on how to save or better spend their money.

The platform will also be accessible through smartphones, giving real-time financial information to users whenever the application is accessed.

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When it comes working with personal finances, consumers tend to get jittery when third parties gain access to what is traditionally very private information. Security always comes into question.

MoneySmart boasts a strong security profile, using daily McAfee malware and automated security tests; VeriSign’s EV3 certificate for data encryption; authenticity checks; and subscribing to TRUSTe’s international privacy policy standards.

The site does not log or capture any data or personal information such as full names, telephone numbers, addresses or banking login details, and operates on the basis of anonymity.

MoneySmart acts as a gateway between Yodlee and the financial institutions in question. Notably, Yodlee is also the aggregator used by 22seven as well as Nedbank’s own PFM platform.

MoneySmart’s CTO, Callan Vorster believes that there’s a misconception surrounding “security” versus “privacy”; while MoneySmart does not store any information that can be tracked back to a user – the service does require users to divulge “private” information, particularly when establishing and tracking financial goals.

One cannot gain insight into their private spending habits with a tool like MoneySmart if they are not willing to share that information.

When it comes to personal finance, van Zyl says there needs to be a shift in the relationshiship South Africans have with their money and how they go about spending it – an ideology shared by 22seven.

Making money

However, one of the key, and most obvious, differences between MoneySmart and 22seven is the fact that the former is a free application, moving away from 22seven’s subscription-based service.

Free services are often accompanied with the fear of hidden catches or advertorial spam – something which MoneySmart says isn’t the case with its service. So how is MoneySmart making money?

“We make money when you save,” said van Zyl.

MoneySmart operates on a commission basis: every time the service successfully leads a user to packages that will save them money, MoneySmart gets a kick-back from the companies who, in turn, gain a client. Van Zyl is quick to point out that the commission rate is flat across the entire platform, eliminating the temptation for companies to try and manipulate the service through quid pro quo bargaining.

The executives also explain that the service’s aim isn’t to move people around from bank to bank, but rather to point users in the right direction – within the context of their own needs, goals and financial environment – to having a better financial outlook.

Vorster agrees that “cheaper isn’t always better” when it comes to recommending products, and explained that the value proposition recommended by the service would be based on extensive research and analysis from MoneySmart’s side. “We’re almost like investigative journalists, ourselves,” van Zyl quipped.

MoneySmart can be accessed online, via smart phones (initially Android with iPhone shortly thereafter) or tablets. “The only requirement is that users have internet banking – that’s it. And in case they get stuck when signing-up or interacting with the platform, we’ve provided a free customer support service. It is available via live chat or a dedicated helpline,” van Zyl said.

The service is compatible with all major South African banks and other financial services, including Woolworths, Kalula, Momentum and Discovery.

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MoneySmart does what it says on the tin