Chapter 1: What is the main topic discussed in this episode?
Kia ora, I'm Nadine Higgins and welcome to The Prosperity Project. There are heaps of apps that help you track your spending and manage your investments, and they are rapidly evolving. Soon you could effectively have a financial advisor in your pocket. To fill us in on what's currently on offer and what's coming, we're joined by the co-founder of Akahu, Josh Daniel.
Akahu is the country's leading open finance intermediary. Josh, and welcome to the Prosperity Project.
Really pleased to be here.
I think we should probably start with a little explainer about what a Kahu is and what your role is when it comes to financial tracking apps.
Sure. So we are an open banking intermediary and basically means that we specialize in data integrations with banks in New Zealand and with other types of financial service providers. So non-bank card issuers, investment platforms, KiwiSaver providers.
And we take all of our integrations with these providers and we bundle them into a single API or connection point for the products that want to use open banking. So if you're building a product like accounting software and you want your users to have data feeds, you could go and build that network of integrations yourself. Or you could outsource that job to an intermediary like us.
So you have one connection point and it's easier to outsource that job.
Okay, so you're the link in the chain that takes my financial tracking app and my bank and brings them together so that I can get the data from one into the other.
That's exactly right. We're just data pipes. We're in the background as infrastructure, but we facilitate that transfer of data between your bank and another software product.
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Chapter 2: How does Akahu facilitate financial tracking?
What else can they do at the moment?
I think the starting point for a lot of these products is account aggregation. So you're on board with the service and they'll invite you to link accounts from banks, KiwiSaver providers, credit cards that you might have elsewhere and see everything in one place.
So that can be powerful on its own because if you're in a household with shared finances or you're in a flat or some other shared finance situation, then you have shared visibility over all accounts. And it can enable some features like net wealth tracking. So it's a really intuitive feature that everyone understands.
If the collective balances are going up, then you're moving in the right direction. And if they're going down, then there might be something to consider. So it's a good starting point because you get everything into one place. Once you've got everything in one place, there are other features that users will generally become familiar with over time. A common one is spend analysis.
So you can see a categorized view of your spend and how that changes over time. and that may show up things that you want to change.
So that's like this chunk is going on the rent or the mortgage, this chunk's going on my fixed bills, and here's what I spent at the pub over the past month.
That's exactly right. So people have heard of frameworks like the Barefoot Investor who have a heuristic for what proportion of your income you should put into future you and put into savings or investments, what proportion you should aim for for your essential expenses like rent or mortgages and food, etc., and what you might want to portion out for discretionary spend.
So people can use a spend analysis to map it to a framework like that, that they feel is relevant to them. Subscription management is another one that you can see very clearly when you've got all your data in one place, you can see the recurring payments and you can decide whether that's still sparking joy or giving you value.
The Marie Kondo method, is it still sparking joy?
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Chapter 3: What features do financial tracking apps currently offer?
I'm talking about the New Zealand-based ones. Do any of them do some radical thing that the other isn't doing, or are they all similar?
A lot of the core functionality is the same, and there's quite a lot of personal preference in here. Just to quickly go through them, so Pocketsmith has been around for about 18 years and based out of Dunedin. So they've been here for a long time and they have a very sophisticated suite of features in their product.
They target what they call the household CFO, so that person that naturally takes on the role of managing the finances in a household.
Oh, I like that. I like to think of myself as the household CFO. Yeah, sounds important. It does.
SortMe is a newer product also based in New Zealand and they have taken a really interesting approach to market where they're also working with financial advisors and through their platform you can give consent to a financial advisor to have shared visibility over your data as well so it really supports that advisor-client relationship and they have a lot of direct-to-consumer features as a standalone product.
And Budget Buddy is another New Zealand-based product that offers that full suite of net wealth tracking, budgeting, spend analysis type features as well. So it really is a case of getting a free trial, trying it out and see which one you like, which one you feel empowered through.
Yeah, but all of them charge something, right? Because I guess I'm always suspicious when something is free that if I'm not the client, then maybe I'm the product. Yeah.
Absolutely. So yes, all of these do charge a fee if you sign up for a plan. I'm not aware of any ways that they monetize beyond that. So I'm not aware of them treating the user as the product. So I think they are sort of the pure subscription model.
I want to talk a lot more about developments in AI because we all know that things are moving at pace. We need to take a quick break. But after that, we'll find out some of the cool new things you might be able to do thanks to AI. Welcome back to the Prosperity Project. We're talking to Josh Daniel about financial tracking apps. And Josh, before the break, we mentioned AI.
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