<\/p>\n\n\n\n
And that\u2019s despite the fact that digital financial applications assist users in a number of ways. An especially exciting field: Apps aiding users in saving money and gaining wealth. Neobanks and fintech companies have established a whole range of solutions that transfer their user\u2019s money into savings accounts, set rules for automatic saving and evaluate their spending behaviors. And even more innovative: Some of those apps feature money storage containers, often called pots or virtual accounts, which allow users to allocate their savings just as they prefer. Doing so, they put traditional banking houses in a tight spot.
<\/p>\n\n\n\n
Savings: A Necessity <\/strong><\/h2>\n\n\n\nBut is it still worthwhile to save money in the first place?
<\/p>\n\n\n\n
Since several decades, we can observe interest rates rolling downward, with little hope for a soon turnaround<\/a>. It\u2019s only natural that many customers ask themselves whether putting their money on a bank is still the best option, especially if activity fees slowly melt savings instead of increasing them.
<\/p>\n\n\n\nHow eagerly people put money on the side is as much a question of financial culture, though. Germany recently hit a record high of 69 billion Euro worth of savings (which did not procure a significant jump in wealth).
<\/p>\n\n\n\n
On the other hand, U.S. Americans are more reluctant to savers. Up to 40% of them have less than $400 in reserves \u2013 bad news when there is an emergency. Given such situations alone, it\u2019s important to have a few nest eggs to fall back on. Just in case.
<\/p>\n\n\n\n
So saving should remain an important pillar in our financial life. But it\u2019s not an easy thing to do for most people, as it requires a specific mindset and strong dedication. With alternatives to banks popping up in the digital realm, traditional financial institutions might find themselves to be part of the problem rather than the solution. As Jon Stein put it in Betterment:<\/a><\/p>\n\n\n\n\u201cThe world creates many reasons to buy things. Meanwhile, no part of the industry solves saving. Banks and investment managers leave it to their customers to solve.\u201d
<\/p>\n\n\n\n
The Case for Digital Saving Apps<\/strong><\/h2>\n\n\n\nDigital money-saving applications, while largely not providing additional incentives to build up reserves, make the process of saving more convenient for the user nonetheless.
<\/p>\n\n\n\n
Some apps are standalone products. They connect with the user\u2019s regular banking accounts, moving money between accounts according to set rules \u2013 apps like Plum, Squirrel<\/em> and savedroid<\/em> belong within this category.
<\/p>\n\n\n\nOther money-saving solutions are part of a wide feature set of banking services, as is the case with Monzo<\/em>. These accounts might also give interest rate (although fairly low) on the money stored.
<\/p>\n\n\n\nThere are a number of features common in all such apps, which constitute the unique advantage they have on traditional saving processes in banks.
<\/p>\n\n\n\n
1. Spending Statistics<\/strong><\/h3>\n\n\n\nOne of the key features of many banking and financial apps are spending statistics. Algorithms \u2013 some simple, some sophisticate \u2013 evaluate a user\u2019s transactions, categorizing and visualizing their spending habits in tables and pie charts. This makes it easier for users to control their finances and discover categories, in which spendings can be cut, to the benefit of savings.
<\/p>\n\n\n\n
2. Automated Saving<\/strong><\/h3>\n\n\n\nA unique quality of many app-based financial assistants is that they don\u2019t simply encourage us to save money \u2013 they trick us into doing it. Putting money on the side on a regular basis is a task which challenges our discipline. We must remind ourselves to save while keeping an eye on our finances, so we don\u2019t \u201cover-save\u201d. Financial apps can tackle this problem in creative ways. For example, some banking apps round up the price of every purchase and transfer the difference to a savings account. Some apps feature even more sophisticated forms of automatic saving. They might enable users to set rules, under which circumstances money wanders into the pots. For example, every time you spend a specific sum dining out, \u20ac5 move to your \u201cSpa Weekend\u201d saving pot.
<\/p>\n\n\n\n
3. Separate Saving Pots<\/strong><\/h3>\n\n\n\nSpeaking of which: Digital saving containers, called pots<\/em> in apps such as Monzo, rank among the clearest advantages of apps in comparison to offline deposit accounts. It\u2019s beneficial to take a detailed look at them, as the integration of separate saving containers can have huge benefits for providers of financial service apps.
<\/p>\n\n\n\nThe Benefits of Saving Pots<\/strong><\/h2>\n\n\n\nSeparate saving containers or pots<\/em> represent singular saving goals and purposes, such as reserve funds for big-ticket items, holiday money or a digital \u201cSwearing Jar\u201d. The integration of such containers is more than just a feature of convenience. At a bank, all saved money is usually deposited on one coherent account. Status updates on one\u2019s savings take the shape of checking the account balance via online banking platforms or at ATMs. Money stocked in an account, that’s all there is to it.
<\/p>\n\n\n\nSavings-storing containers follow a different approach. Usually, pots have a visible funding goal and a progress bar, showing how much money has already been contributed to reaching this goal. This adds just a pinch of gamification to the somber experience of building up money reserves. And it adds focus, as clear labeling can visualize the goal of saving right on first sight. Statistics and visualization also help to track progress and bolster motivation to really put the money aside.
<\/p>\n\n\n\n
What\u2019s more: Pots can work together with automated saving rules, as discussed above. That means that funds can move from one container to another, which makes smart saving decisions possible.
<\/p>\n\n\n\n
Shared Saving Pots<\/strong><\/h2>\n\n\n\nThe abundance of digital ways to connect with other people today makes way for one final, promise full functionality in savings applications: Shared saving pots. <\/strong>They are connected to several accounts and allow contributors to save towards a common goal. This makes them a worthwhile choice for families, groups of peers and even private organizations \u2013 once common banking regulations such as KYC or CTF are adhered to.
<\/p>\n\n\n\nShared saving is also one of the features which are not easy to develop, on the software side of things, as we will see right away.
<\/p>\n\n\n\n
Building Savings Pots: 2 Variations <\/strong><\/h2>\n\n\n\nIn theory, anyone with access to account statement data can build a savings app. Yet, there are two ways to organize money-saving in applications. We will mostly concentrate on the second type, with the former having a number of disadvantages and does not allow shared saving pots.
<\/p>\n\n\n\n
1st Type: Pots on Wallet Level<\/strong><\/h3>\n\n\n\nDigital saving pots can either be realized as separate wallets or as subaccounts linked to one wallet. We will call those subaccounts wallet accounts <\/em>here as we do in the context of CoreWallet, our emoney management software framework,<\/a> which can implement both types of saving pots.
<\/p>\n\n\n\nWallet accounts<\/em> have some advantages when it comes to the logical separation of funds. Savings are not transferred from one (bank) account to another one. Instead, the funds remain within one (bank) account. The money meant to be saved is booked to a separate wallet account to logically split it from the \u201cavailable\u201d balance. It still can be displayed accordingly in a UI\/frontend.
<\/p>\n\n\n\nHowever, these wallet accounts are not genuine accounts. No (real) money has been withdrawn from the main account and transferred there. This means that the \u201csavings containers\u201d don\u2019t affect the balance of the actual account. There is no blocking mechanism preventing the savings from being spent or disappearing from the account once it gets cleared.
<\/p>\n\n\n\n
It\u2019s just money with a different denotation attached to it. For detailed information, consult the CoreWallet Documentation<\/a>.<\/p>\n\n\n\n2nd Type: Pots as Different Accounts<\/strong><\/h3>\n\n\n\nIn this variant, every savings pot exists as a new, full account, related to a user\u2019s general account. A wallet system, connecting to the accounts via a PSD2 API, projects and regulates transactions between those accounts. It\u2019s there, where account balances are monitored and where routines are executed \u2013 if money moves from one account to the other, it\u2019s displayed in the wallet system as well.
<\/p>\n\n\n\n
Integrating a simple reconciliation logic into the wallet system also makes automatic saving possible. It allows the service providers to integrate an algorithm which processes balance statements and determines actions. The user can set rules using a frontend built upon the wallet system. For example, they order the system to \u201csave \u20ac10 whenever I eat outside\u201d. The wallet system would then inspect the general account statements for entries that signify eating at restaurants and puts transactions to the saving account in motion.
<\/p>\n\n\n\n
Setting up Saving Pots With<\/strong><\/h2>\n\n\n\n![\"The](\"\/blog\/wp-content\/uploads\/2018\/12\/corewallet-1024x149.jpeg\")
<\/figure>\n\n\n\nCoreWallet <\/strong>can be used as a solid software foundation for the backend of a wallet system. It is all set to integrate the functionalities a service provider requires:
<\/p>\n\n\n\n\n- User \/ Wallet Registration<\/strong><\/li>\n\n\n\n
- Authentication Processes<\/strong><\/li>\n\n\n\n
- Ready for KYC and AML Compliance<\/strong><\/li>\n\n\n\n
- Emoney Management<\/strong><\/li>\n\n\n\n
- Audit Trail<\/strong><\/li>\n\n\n\n
- Tracing of Transactions<\/strong><\/li>\n<\/ul>\n\n\n\n
The CoreWallet backend can also be adapted to dock a PSD2 API. It is then set to allow more advanced saving pot features, such as: <\/p>\n\n\n\n
Social Savings<\/strong><\/h3>\n\n\n\nProcessed by the CoreWallet backend, saving pots can be connected to each other to form a whole saving network. There, groups of people share saving pots, allowing them to transfer their emoney to them. CoreWallet can also act as a foundation for peer-to-peer transactions or a payment system based on saving accounts \u2013 the wallet provider manages the accounts and allows users to choose which account to debit for purchases. <\/p>\n\n\n\n
(Please mind, though that such business models must be counterchecked to adhere to the effective regulations of the countries the service is available in \u2013 compliance is a key business factor. However, CoreWallet is designed to adhere to KYC and anti-fraud measures<\/a> taken.)
<\/p>\n\n\n\nSummary<\/strong><\/h2>\n\n\n\nSaving features in digital finance apps have the potential to influence our spending behavior for the better, providing new incentives and convenient ways to build up monetary reserves. Among them, digital saving pots hold great potential for innovation. By designing specific rules, locks and bolts, interacting with each other, digital saving accounts can be set up to react to our spending habits and overall financial situation.
<\/p>\n\n\n\n
In the end, it\u2019s up to your business to find new lines of thought and develop specific use cases for your financial app. What you can rely on is, that CoreWallet is all set to support you with a battle-proven, yet flexible software framework.<\/p>\n\n\n\n
\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n\n\n\n
How eagerly people put money on the side is as much a question of financial culture, though. Germany recently hit a record high of 69 billion Euro worth of savings (which did not procure a significant jump in wealth).
<\/p>\n\n\n\n
On the other hand, U.S. Americans are more reluctant to savers. Up to 40% of them have less than $400 in reserves \u2013 bad news when there is an emergency. Given such situations alone, it\u2019s important to have a few nest eggs to fall back on. Just in case.
<\/p>\n\n\n\n
So saving should remain an important pillar in our financial life. But it\u2019s not an easy thing to do for most people, as it requires a specific mindset and strong dedication. With alternatives to banks popping up in the digital realm, traditional financial institutions might find themselves to be part of the problem rather than the solution. As Jon Stein put it in Betterment:<\/a><\/p>\n\n\n\n \u201cThe world creates many reasons to buy things. Meanwhile, no part of the industry solves saving. Banks and investment managers leave it to their customers to solve.\u201d Digital money-saving applications, while largely not providing additional incentives to build up reserves, make the process of saving more convenient for the user nonetheless. Some apps are standalone products. They connect with the user\u2019s regular banking accounts, moving money between accounts according to set rules \u2013 apps like Plum, Squirrel<\/em> and savedroid<\/em> belong within this category. Other money-saving solutions are part of a wide feature set of banking services, as is the case with Monzo<\/em>. These accounts might also give interest rate (although fairly low) on the money stored. There are a number of features common in all such apps, which constitute the unique advantage they have on traditional saving processes in banks. One of the key features of many banking and financial apps are spending statistics. Algorithms \u2013 some simple, some sophisticate \u2013 evaluate a user\u2019s transactions, categorizing and visualizing their spending habits in tables and pie charts. This makes it easier for users to control their finances and discover categories, in which spendings can be cut, to the benefit of savings. A unique quality of many app-based financial assistants is that they don\u2019t simply encourage us to save money \u2013 they trick us into doing it. Putting money on the side on a regular basis is a task which challenges our discipline. We must remind ourselves to save while keeping an eye on our finances, so we don\u2019t \u201cover-save\u201d. Financial apps can tackle this problem in creative ways. For example, some banking apps round up the price of every purchase and transfer the difference to a savings account. Some apps feature even more sophisticated forms of automatic saving. They might enable users to set rules, under which circumstances money wanders into the pots. For example, every time you spend a specific sum dining out, \u20ac5 move to your \u201cSpa Weekend\u201d saving pot. Speaking of which: Digital saving containers, called pots<\/em> in apps such as Monzo, rank among the clearest advantages of apps in comparison to offline deposit accounts. It\u2019s beneficial to take a detailed look at them, as the integration of separate saving containers can have huge benefits for providers of financial service apps. Separate saving containers or pots<\/em> represent singular saving goals and purposes, such as reserve funds for big-ticket items, holiday money or a digital \u201cSwearing Jar\u201d. The integration of such containers is more than just a feature of convenience. At a bank, all saved money is usually deposited on one coherent account. Status updates on one\u2019s savings take the shape of checking the account balance via online banking platforms or at ATMs. Money stocked in an account, that’s all there is to it. Savings-storing containers follow a different approach. Usually, pots have a visible funding goal and a progress bar, showing how much money has already been contributed to reaching this goal. This adds just a pinch of gamification to the somber experience of building up money reserves. And it adds focus, as clear labeling can visualize the goal of saving right on first sight. Statistics and visualization also help to track progress and bolster motivation to really put the money aside. What\u2019s more: Pots can work together with automated saving rules, as discussed above. That means that funds can move from one container to another, which makes smart saving decisions possible. The abundance of digital ways to connect with other people today makes way for one final, promise full functionality in savings applications: Shared saving pots. <\/strong>They are connected to several accounts and allow contributors to save towards a common goal. This makes them a worthwhile choice for families, groups of peers and even private organizations \u2013 once common banking regulations such as KYC or CTF are adhered to. Shared saving is also one of the features which are not easy to develop, on the software side of things, as we will see right away. In theory, anyone with access to account statement data can build a savings app. Yet, there are two ways to organize money-saving in applications. We will mostly concentrate on the second type, with the former having a number of disadvantages and does not allow shared saving pots. Digital saving pots can either be realized as separate wallets or as subaccounts linked to one wallet. We will call those subaccounts wallet accounts <\/em>here as we do in the context of CoreWallet, our emoney management software framework,<\/a> which can implement both types of saving pots. Wallet accounts<\/em> have some advantages when it comes to the logical separation of funds. Savings are not transferred from one (bank) account to another one. Instead, the funds remain within one (bank) account. The money meant to be saved is booked to a separate wallet account to logically split it from the \u201cavailable\u201d balance. It still can be displayed accordingly in a UI\/frontend. However, these wallet accounts are not genuine accounts. No (real) money has been withdrawn from the main account and transferred there. This means that the \u201csavings containers\u201d don\u2019t affect the balance of the actual account. There is no blocking mechanism preventing the savings from being spent or disappearing from the account once it gets cleared. It\u2019s just money with a different denotation attached to it. For detailed information, consult the CoreWallet Documentation<\/a>.<\/p>\n\n\n\n In this variant, every savings pot exists as a new, full account, related to a user\u2019s general account. A wallet system, connecting to the accounts via a PSD2 API, projects and regulates transactions between those accounts. It\u2019s there, where account balances are monitored and where routines are executed \u2013 if money moves from one account to the other, it\u2019s displayed in the wallet system as well. Integrating a simple reconciliation logic into the wallet system also makes automatic saving possible. It allows the service providers to integrate an algorithm which processes balance statements and determines actions. The user can set rules using a frontend built upon the wallet system. For example, they order the system to \u201csave \u20ac10 whenever I eat outside\u201d. The wallet system would then inspect the general account statements for entries that signify eating at restaurants and puts transactions to the saving account in motion. CoreWallet <\/strong>can be used as a solid software foundation for the backend of a wallet system. It is all set to integrate the functionalities a service provider requires: The CoreWallet backend can also be adapted to dock a PSD2 API. It is then set to allow more advanced saving pot features, such as: <\/p>\n\n\n\n Processed by the CoreWallet backend, saving pots can be connected to each other to form a whole saving network. There, groups of people share saving pots, allowing them to transfer their emoney to them. CoreWallet can also act as a foundation for peer-to-peer transactions or a payment system based on saving accounts \u2013 the wallet provider manages the accounts and allows users to choose which account to debit for purchases. <\/p>\n\n\n\n (Please mind, though that such business models must be counterchecked to adhere to the effective regulations of the countries the service is available in \u2013 compliance is a key business factor. However, CoreWallet is designed to adhere to KYC and anti-fraud measures<\/a> taken.) Saving features in digital finance apps have the potential to influence our spending behavior for the better, providing new incentives and convenient ways to build up monetary reserves. Among them, digital saving pots hold great potential for innovation. By designing specific rules, locks and bolts, interacting with each other, digital saving accounts can be set up to react to our spending habits and overall financial situation. In the end, it\u2019s up to your business to find new lines of thought and develop specific use cases for your financial app. What you can rely on is, that CoreWallet is all set to support you with a battle-proven, yet flexible software framework.<\/p>\n\n\n\n
<\/p>\n\n\n\nThe Case for Digital Saving Apps<\/strong><\/h2>\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n\n\n\n1. Spending Statistics<\/strong><\/h3>\n\n\n\n
<\/p>\n\n\n\n2. Automated Saving<\/strong><\/h3>\n\n\n\n
<\/p>\n\n\n\n3. Separate Saving Pots<\/strong><\/h3>\n\n\n\n
<\/p>\n\n\n\nThe Benefits of Saving Pots<\/strong><\/h2>\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n\n\n\nShared Saving Pots<\/strong><\/h2>\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n\n\n\nBuilding Savings Pots: 2 Variations <\/strong><\/h2>\n\n\n\n
<\/p>\n\n\n\n1st Type: Pots on Wallet Level<\/strong><\/h3>\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n\n\n\n2nd Type: Pots as Different Accounts<\/strong><\/h3>\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n\n\n\nSetting up Saving Pots With<\/strong><\/h2>\n\n\n\n
<\/figure>\n\n\n\n
<\/p>\n\n\n\n\n
Social Savings<\/strong><\/h3>\n\n\n\n
<\/p>\n\n\n\nSummary<\/strong><\/h2>\n\n\n\n
<\/p>\n\n\n\n
\n\n\n\n