Is the future of finance on an app?

With convenience being a necessity in everything we do, could our financial futures be found solely on apps? From micro-investing to neobanks, OTR presents the latest in all things financial. (Image source: Samsung Insights)

By Sezen Bakan | @sezenbakan

Every service we use today is constantly evolving to be faster, more convenient, and easily accessible from our phones.

Think next day delivery for online shopping, meal delivery services saving you from going out to get take-out, online streaming subscriptions rendering video rental shops obsolete, and so on. It makes sense that the handling of our finances has followed us onto our phones and laptops.

Initially, this movement was led by traditional banks, who created websites and apps to access account details in a push towards online communication.

However, the last few years have seen a rise in online financial entities solely found apps and websites, with no brick-and-mortar branches to fall back on.

Specifically, investing and banking have found a new life online, and in the palm of our hands.


University of South Australia lecturer for economics and online course facilitator for financial planning Dr Vandana Arya believes that micro-investment is a relatively new term which refers to the investment of amounts more similar to spare change than large sums of money.

Apps such as Raiz, Spaceship Voyager and CommSec Pocket are particularly popular micro-investment options that require a small or non-existent minimum investment into various portfolios, which themselves range from low-risk to high-risk portfolios.

Raiz even offers a “socially-conscious” Emerald portfolio, and features ‘round-ups’ which automatically take and invest small change from everyday purchases.

Dr Arya said that these apps are a good “stepping-stone,” into investing for younger people who have little money, or don’t know how to invest.

However, she cautioned against expecting big returns from micro-investing.

“If you need higher returns, you should be ready for the higher risk.

“But [young people], they don’t have that kind of money.”

Finance-focused content creator Nicholas Muscat (also known by the screenname Aussiemoneyman), uses micro-investment apps to review them, but he still has a large majority of his money in more “traditional” brokers such as eToro, Stake and SelfWealth. He agreed with Dr Arya’s assertion that micro-investment apps are good for beginners, as long they don’t expect a large return.

“If you have got a smaller amount [of money]…these apps are good…because they’re less complex, they’re easy, they can be cheap…apps like Spaceship, and the CommSec Pocket App as well, has very competitive fees,” said Mr Muscat.

“These [micro-investment] apps offer a really limited amount of options. If you want to invest in one of the options they offered, well that’s brilliant, and you earn a smaller amount of money.”

Raiz growth and marketing manager Harrison Lochtenberg said micro-investment apps such as Raiz are a means of investing in funds that might otherwise seem unattainable for people.

“Maybe it’s something that requires a lot of capital, or people think that investing in a share market is just not for them,” said Mr Lochtenberg.

“You’ll ask…most Australians, ‘Have you ever invested?’ and they’ll say, ‘No, I’ve never invested.’ But nearly all of them have a superannuation account, so whether they know it or not, they’re already investing.”


Neobanks are banks that operate exclusively online, without traditional physical branches. Examples include Up Bank, 86 400, and Volt Bank.

Mr Muscat said that while he doesn’t necessarily prefer neobanks to traditional banks, he appreciates their innovation.

He said neobanks are particularly relevant to the needs of people living in remote areas.

“I live out in the Blue Mountains, and I don’t really want to drive 40 to 30 minutes to where the nearest [branches] are.

“Now if everything’s online, you just do it on your phone…computer, occasionally you might make a call, but it’s pretty much all done online.

“You don’t have to interact with people unless you want to. It has a lot of benefits from convenience [to] geographical benefits.”

While Dr Arya conceded the increased convenience neobanks offer, she said the credibility and history of Australia’s more established banks could not be easily replaced in her view.

Privacy concerns

When it comes to putting our information online and into apps, the issues of privacy and where that data goes always remain relevant, as seen with recent concerns of social media app TikTok.

When it comes to apps that are directly involved in the handling of people’s finances, Dr Arya said there is a cause for concern.

“We are putting all our finances in their hands, we are making our lives so transparent, and we don’t know how they are using our data,” said Dr Arya.

“For example, with Raiz… they are linking to [your] credit card account, right? So they know when I go and buy my coffee. They know when I buy my groceries and what exactly I’m buying, what am I doing, so it’s like my life is becoming an open book in front of them.

“They know exactly all my movements, and that data can be used anywhere. So I think privacy issue is a very big thing.”

Dr Arya acknowledged that these concerns may be held more by the older generations than the younger ones, something Mr Muscat agreed with.

“The apps are designed for new investors, which is why I think in part, they’re so popular among young people,” said Mr Muscat.

“Young people are much more comfortable security-wise. There’s a study which shows the younger you are, the more comfortable you are putting your details and ID into an app.

“The older generation [are] a little bit more hesitant.”

Addressing privacy concerns, Mr Lochtenberg said Raiz uses the same third-party data provider as many banks, Yodlee.

“They work with a lot of the major banks in the US and they have worked with a couple of the Australian banks,” Mr Lochtenberg said.

“They’re fully encrypted, they have bank-level security, and they’ve actually handled bank data before so we just go through them.”

While an individual’s data is produced “securely” on the Raiz app so the individual can view their round-ups, the data is not stored on Raiz’s servers and is instead placed in the protection of Yodlee.

Raiz itself may not view or sell individual data. However, upon an investigation of Yodlee, it can be found that the company sells data pulled from bank and credit card transactions.

Although they claim the data is anonymous, a recently-released confidential Yodlee document indicated that examination of the data could identify individual users.

Mr Lochtenberg said privacy concerns are often instigated by more-established banks in Australia.

“Australia is in a unique spot in terms of competitive landscape, [as] you really just have the four major banks.

“And all the small banks that you think make it more competitive, are generally owned by the big four.

“So they tend to make it really hard for other…small apps to compete in the market.

“One of the things that they do, which we’ve seen from [Commonwealth Bank] and other institutions, is that they’ll try and do a bit of fear-mongering around providing your details.”


While Mr Muscat holds very favourable views of micro-investment apps, he said people need to be careful and take it seriously.

“One of the most noticeable drawbacks is that people gamify.”

Mr Muscat said because the apps are simple to use and are on the phone, people are at risk losing money as a result of not taking the apps as seriously as they would a complicated computer-based trading platform.

“I think  [micro-investment apps] can be fantastic, but obviously it sort of does introduce another level of risk around something that is already inherently risky.”

Dr Arya also held concerns over the lack of real-world locations, which she feared could extend to lack of accountability if something were to go wrong.

However, both Mr Muscat and Dr Arya said micro-investment apps could serve as a great entry into the world of investing, but research by the potential investor still needs to remain a key component in the process.

“When you’re investing, you are getting a return on the basis you’re taking a risk. The way you mitigate that is making sure you know what you’re doing,” said Mr Muscat.

“I initially started with peer to peer lending before the stock market, I rang all the fund managers of the companies that I was investing through peer to peer lending.

“I called them all and I read through their [product disclosure statements] and their terms and conditions…word by bloody word.

“I know that’s a bit extreme, but that’s because I wanted to feel comfortable, and by the time I’d done all that with the fund managers, I was a hundred per cent confident to start investing.”

While it appears neobanks could conceivably be the future of banking, both Dr Arya and Mr Muscat agreed there will always be a place for traditional forms of investment alongside technological advancements.

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