Why fintech apps are the new therapists

It can’t be stressed how emotional a subject money can be with many of us suffering from financial anxiety. Our finances are often the number one source of stress in our lives, and are interlinked with everything we do, need and want. We go to work and dedicate our lives to develop careers and generate enough money to build a life on, seeing money as synonymous with safety. To learn about the psychology of money management, just ask someone if they could live on £1000 a month and they’ll instantly break down their day-to-day existence into how much they spend – on rent, bills, food, internet etc. And then there are the wants. We all have our dream lists – houses, holidays, cars etc – with money nearly always at the crux of this.

This creates a real psychological factor about money. Two people with the same circumstances and same amount of money in their bank account have the potential to view this completely differently – one may feel ecstatic while the other is extremely stressed. Money management and mental health have never been more interlinked.

Coping with money worries has led to an explosion of different fintech apps in recent years with these designed to tap into our psychology around money and improve our financial wellbeing These don’t just see to a need (such as debt management apps) but speak to our wants. For instance, trading apps are increasingly gamifying how DIY investors approach markets and unlocking as much serotonin as they do returns. Conversely, many apps are designed to ease the financial burden and anxiety we live with. The digital transformation of finance is now developing solutions firmly with people’s financial anxiety in mind.

Digital financial therapy

As mentioned, everyone is different in terms of how they view money and how it affects them. Some throw themselves into the markets and can’t imagine not trading each day, while others hyperventilate at just thinking about their finances. How a person feels about money is crucial to the financial services and products they require, to either chase the serotonin hit of trading or escape the stress of debt. Fortunately, AI in finance is now allowing fintech apps to understand and develop a picture of someone’s attitude to money.

Through machine learning, these systems are designed to scrawl through how someone uses their money (the trades they execute, the direct debits they have, the kinds of brands they most often transact with etc) to develop a complete view of someone’s psychology. Do they trade frequently in the morning at the first sight of global headlines? Do they nearly always shop on second-hand platforms or at bargain outlets? This activity is combined with demographic data, as well as predictive financial analytics, to develop an accurate and detailed view into a user’s psychology.

Once created, this can be used to shape how top money management apps responds to that person’s behaviour and even influences the UX they are delivered. This can include prompts and notifications to review spending levels, recommendations about limits, helpful tips for overcoming debt traps and right up to red flags around potentially serious behaviour (someone running out of money or their wellbeing suffering due to finances).

Using financial tools in this way makes fintech apps more interactive and dynamic, creating a relationship between user and technology that can really benefit the former. There are already many apps empowering financial decisions with tech, and here are some of the most interesting ones.

The apps that improve financial habits

One of the leading financial planning apps in this field is Impause, which as the name suggests is built around the power of both impulsiveness (with regards to spending) and pausing, in relation to negative habits. Impause uses behavioural psychology to help its users understand the WHY behind their money patterns, with financial psychologists influencing this app’s design.

This sees Impause learn from its users’ behaviour, identify patterns, and then furnish them with bite-sized interactive lessons rooted in behavioural psychology. This involves personalised content being funnelled their way, shaped to a user’s unique money personality, and their progress around budgeting and saving is supported with badges, motivational streaks and mindset checkpoints.

Given financial stress can often be a household issue, the developers behind Zeta designed this app so partners could share the burden between them. Unfortunately, money is often a reason for separation or divorce, so Zeta gets everyone on the same page with shared dashboards for users to pay bills, track shared spending and save for goals all in one place. Like with many parts of mental health, those struggling with financial stress will often do so in silence and not want to share. Zeta instead forces people to share these and confront challenges head on.

MyCredello is a solution designed to keep users’ financially fit and their stress levels down, helping them set and then meet both short-term and long-term financial goals. Users of this app can manage all their debts in one place and track their way to debt freedom with milestones tailored to them. MyCredello also helps users keep their credit score health in check with daily score monitoring, real-time credit report alerts and tools to help them build better credit habits and stay on track.

Can fintech replace financial advisors?

No one is suggesting that these kinds of apps will ever replace therapists, or even financial advisors. This comes back to the age old debate of man vs machine, but the AI being used is posing potentially unprecedented levels of insights. Harnessed with the right UX design, and these apps could have a real impact on users’ daily financial lives – from viewing their financial situation in a different light, to giving them actionable things to do about improving this. Our digital lives are rapidly evolving, and this may very well be the thing that challenges our age-old psychology hang ups around money.