Alternative Towards Financial Independence Through Personal Financial Recording Applications

Knowledge of managing finances was not taught in schools, but having basic personal finance knowledge, such as financial planning, savings and investments, and debt management is an important step towards healthy finances. Everyone has ambitions to achieve this, especially at the beginning of the year.

Recently, digital-based tools have helped more and more basic knowledge appear, along with increasing internet penetration and financial literacy. Number of app users wealthtech has continued to increase since the pandemic hit and succeeded in catapulting Magic as a unicorn startup.

Popularity wealthtech encourage the emergence of trends in the presence of personal financial recording applications. Another term that is often used to categorize it is personal financial management (personal finance) or budget tracking. The essence remains the same.

Previously, this feature was generally present as an added value to the application wealthtech or digital finance to manage investment allocations to achieve certain goals, for example pension funds, education funds, wedding funds, and so on.

The approach taken by application developers of this kind is to make it easier for users to track expenses and monitor their finances across multiple accounts at once by linking financial accounts. Next the information will be categorized to show exactly where the user's money goes.

These applications are also known as financial aggregators because they combine or unify financial reports, starting from bills, bank accounts and credit cards in one place. At a more advanced stage, these applications can include financial planning, taxes, investment portfolio analysis, credit monitoring, and much more.

The closest examples that are popular in the global market are Money Lover, Mint, Goodbudget, YNAB (You Need a Budget), PocketGuard, and many more. This application has even expanded to more specific needs, for example financial management to track expenses, maintain a budget, make it easier to save, get out of debt, and for freelance workers.

Although there are many variations of terms, the goal is only one: helps lead users towards financial independence.

This type of application is starting to appear in Indonesia, among others my finances, Sribuu, Pay OK, PINA, Finoo, Moni, Xettle, Finku, New (Fazz Financial Group). Some of them have won the trust of investors in the form of obtaining fresh funds.

Not just apps MSME financial records It's only popular because it has great digitalization potential. Similar applications that target individuals also have potential that cannot be underestimated.

Quoting OJK data, based on the results of a national survey on financial literacy and inclusion in 2016, only around 29,7% of people understand finances. Meanwhile, only 12,6% of people have financial planning. Furthermore, there are 67,8% of people who use financial products and services, but only 29,7% of people who well literate.

This shows that many people have used financial products and services without being equipped with adequate financial understanding. The survey also shows that people's financial goals are dominated by short-term goals to fulfill daily life. Only 12,6% have prepared for their children's education and only 6,3% have financial goals to prepare for retirement.

Co-founder and CEO Moni Ahmad Faiz Nasshor (Faiz) explained that there are two things that make a personal finance management application a reality booming in Indonesia. First, because of the pandemic which has caused people to become more aware of the importance of managing personal finances.

"This can be seen by the increasing number of our retail investors and also the increasing number of accounts on social media that share personal finances," said Faiz when contacted DailySocial.id.

Second, supported by the increasing adoption of digital transactions. He said, five years ago the majority of expenditures were probably still using cash, but this is starting to shift to digital transactions along with the emergence of digital platforms such as e-commerce, ride hailing, and the most important thing is e-wallet.

"This shift has resulted in the emergence of the potential for automatic recording, which previously was still very difficult to do because expenditures still used methods cash. "

Moni was initiated to facilitate the financial recording process, with the main feature being automatic transaction recording. So that the automatic recording process can be carried out, Moni uses three data sources, namely cellphone notifications, email notifications, and direct connections to bank accounts/e-wallet.

So far there is a list of 25 products that Moni has supported along with the data sources used, mostly from banking, e-money and e-commerce applications. Some of them are BCA Internet Banking (bank account and e-wallet), Jenius (email notification), GoPay (bank account and e-wallet), Grab (email notification), and Tokopedia (email notification).

Another feature available in Moni is Transfer (make it easy top up/cash withdrawal/transfer for more accurate recording) and Balance (monitor various balances e-wallet from the Moni application). So far Moni has not done any monetization. All features can be used for free.

It is claimed that Moni has thousands of users with new user growth of up to three times per month and the number of transactions recorded more than 10 times.

On its website, Moni claims that it does not store data Password bank account and e-wallet user. The company only stores email data from applications that users have approved. To protect sensitive data, the service is claimed to be encrypted using AES 256-bit encryption which is commonly used in banking and the military. Moni has been registered with PSE Kominfo.

Don't shift the role of financial planner

Even though applications like Moni are popping up, the question arises as to whether the application alone is enough to accompany someone's personal financial journey. Co-founder and CEO Halofina Adjie Wicaksana said that this condition actually adds alternatives for consumers in managing their finances.

“There may be areas [of application] budgeting, financial planning, investment, and so on which actually complement each other, because there is more or less. So do you still need it? financial planner? No everyone needs someone present personal based [financial planner], the most important thing is the implementation of finance planning itself," he explained.

He continued, there are many ways to implement financial planning. There are those who need advice, read articles, or use tools certain things that can help consumers.

“So in general activities managing cash flow, doing financial planning, investment planning, portfolio management are elements that are not onlyProvide by just one company, but it could be one user use multiple products at the same time. "

Halofina is a startup that provides application-based financial planning, investment and consultation. There is FINADVISOR for easy financial and investment planning with a selection of the best investment products that have been curated by experienced financial experts. Underlying The asset classes at Halofina are mutual funds (in collaboration with Tanamduit) and gold from Indogold.

Then, FINACONSULT for direct financial consultations with certified financial consultants regarding financial planning, money management, debt management, or investment planning for long-term financial goals. This feature is available thanks to collaboration with ZAP Finance.

Finansialku Founder and CEO Melvin Mumpuni also expressed the same thing. He said that financial planning applications actually open up new user segments, whose problems can be easily resolved through the application. “Some cases can be resolved with the application, but there are quite a few cases complicated, requires special handling from financial planner," said Melvin.

To work on this new segment, the Finansialku application is now powered by the latest Brangkas features. This feature is tasked with helping users become more disciplined in recording every income and expenditure from bank transactions. In this way, users can carry out routine evaluations every month and find out about any financial leaks. Brangkas is here thanks to collaboration with startups open finance Safe.

There are four banks that have been integrated with the Brangkas feature, namely BCA, BRI, Bank Mandiri and BNI. Not only that, there are other supporting features, namely Financial Check Up and Financial Planning. "As proof of Finansialku's commitment to consumer protection, Finansialku has carried out ISO27001 certification relating to data security," added Finansialku CTO Alvin Augusto Saputra.

To strengthen Adjie and Melvin's statement, Faiz added that the journey of financial planning is not something that can be done overnight, because there are many factors that influence a person's condition. A financial planner can provide very detailed advice to each user.

Moni's presence, he continued, is not to replace the role of a financial planner. In fact, it complements and helps them. Personal financial recording applications can help users monitor their expenses and assets more easily to achieve their desired financial goals.

"Moni is currently in the initial stage of financial planning, where before carrying out financial planning, user should have known their finances. With Moni's automatic financial recording process, can be known more easily, so user can find out what steps they can take next," said Faiz.

As part of a financial education journey, this financial planning application journey is still new. Adjie said, the increasing number of players in various fintech sectors is creating awareness towards alternative financial products continues to grow, especially young people who tend to be explorative.

"The challenge is precisely how to increase literacy and education itself so that the use of these products can be accompanied by an understanding of the fundamentals of financial planning, so that they can get maximum benefits from these products according to their individual needs," said Adjie.

Faiz believes that Moni can compete with similar applications from abroad that can be used in Indonesia, and can even be better. The challenge is how to change people's perceptions about this.

“Our vision is still the same, namely helping users manage their finances in an easy and enjoyable way. For this reason, we continue to add products that are integrated with Moni. In addition, we are also conducting some experiments as a resource revenue, " he concluded.