Toronto-Dominion Bank is partnering with a New York-based app maker to help its customers use their smartphones to keep track of every purchase they make.
This week, TD will announce a partnership with Moven, a company whose namesake app monitors spending habits and, as a result, allows users to tighten up their discretionary spending and save money.
"If you want to get people to save money, you've got to stop them spending, so we're helping them understand where they're spending money," said Brett King, Moven's founder and CEO.
"What we start to see, after three to six months [of usage] is that people in certain categories – dining out, catching taxis – start to level off."
Moven's app works in much the same way as health-tracking apps such as FitBit – but for personal finance. The service allows users to make purchases using their smartphones as mobile wallets, but also keeps track of every purchase. The result is an instant analysis of the user's financial health. For example, if a user purchases movie tickets, the app adds the purchase to the "entertainment" portion of the user's budget, and lets the user know how their entertainment spending this month compares with their average spending. The idea is that by allowing users to keep a close eye on how their spending habits fluctuate, Moven can also change behaviour and incentivize saving.
In a way, apps such as Moven represent the next generation of an industry that traces its modern roots to the old bank account passbook, in which users would keep detailed records of their transactions. With increasing automation, digitization and a wide variety of instant payment methods, such means of personal finance management have taken a backseat. With the Moven partnership, TD hopes to reintroduce the concept based on "soft advice" – an app that, rather than chastising users for spending too much money, offers them updates and tidbits of information about their spending habits with every purchase.
"We've been interested in [personal finance management], but adoption is very low," said Rizwan Khalfan, Chief Digital Officer and senior vice-president of digital channels at TD Bank Group. "It's one of those things where you're constantly being reminded of how you're missing your goals."
For TD, the partnership offers a means to differentiate the company's smartphone app from that of other banks. The company also gains another source of data to help study customer spending behaviour.
The move is part of an aggressive push by TD into mobile finance. Earlier this month, the bank announced it is partnering with UGO, a mobile wallet platform that allows users to digitize their credit and loyalty cards for use on smartphones. The service is aimed at automating the purchase and loyalty card point collection process, since the average Canadian consumer tends to be a member of about six and seven different loyalty programs.
For Moven, the partnership is all about expanding the startup's user base. In August, Moven partnered with New Zealand bank Westpac, gaining access to a potential 500,000 users in that country. With the TD deal, the app maker could see another potential 3 million to 4 million new users in the next few years.
"The reasons we chose New Zealand and Canada is primarily because the regulatory environment about sharing information was favourable," said Mr. King. "Both New Zealand and Canada have high [mobile payment] penetration compared to the U.S. – that's where Canada has a distinct advantage."