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RESEARCH ARTICLE
Personal finance apps and low-income households
Declan French | Donal McKillop | Elaine Stewart
Queen's Management School, Queen's
University, Belfast, UK
Correspondence
Donal McKillop, Queen's Management School,
Queen's University Belfast, Riddel Hall,
185 Stranmillis Road, Belfast BT9 5EE, UK.
Email: dg.mckillop@qub.ac.uk
Abstract
The use of personal finance smartphone apps results in an improvement in various
measures used to assess financial knowledge and skills, attitudes and motivations,
and financially capable behaviors for those in low-income households. Those pro-
vided with smartphone apps demonstrated increased self-confidence in financial
decision-making and financial literacy and improved their ability to delay self-
gratification and their sense of being able to effect change. Financially capable
behavior changes manifested in being better able to keep track of finances and
manage unexpected bills. User engagement with finance apps could be improved by
targeting users with a specific financial decision-making problem, personalizing the
apps through push notifications to encourage ongoing user engagement, and incor-
porating game mechanics.
KEYWORDS
finance apps, financial literacy, game mechanics, personal finance, smartphone apps
JEL CLASSIFICATION
D12; D14
1|INTRODUCTION
A feature of the last decade has been the rapid growth in
smartphones and the development of personal finance apps for man-
aging overall finances (track bill due dates, track subscriptions, calcu-
late credit scores, manage investments). The Financial Capability
Strategy for the UK, 2015 highlights improved digital literacy as an
important outcome in the advancement of financially capable behav-
iors “….being able to use online banking services,to use mobile apps,and
to compare financial services online is crucial for being able to keep track
of your money and make informed decisions.”(Bagwell, Hestbaek,
Harries, & Kail, 2014, p. 22, UK Financial Capability Outcome
Framework).
French, McKillop, and Stewart (2020) investigated the efficacy of
personal finance smartphone apps to improve the financial capability
of those on a low income. They developed four smartphone apps
(a loan interest comparison app, an expenditure comparison app, a
cash calendar app, and a debt management app). These apps were
provided to members of Derry Credit Union, the largest credit union
in Northern Ireland (NI). Credit union members in NI tend to be on rel-
atively lower incomes than the general population and live in more
socioeconomically disadvantaged areas. A Randomized Control Trial
(RCT) was used to assess the efficacy of the apps in improving finan-
cially capable behaviors. Improvements were found in several mea-
sures designed to gauge financial knowledge, understanding and basic
skills and attitudes and motivations. These improvements translated
into an improvement in a small number of the measures gauging
financially capable behaviors. However, the improvements in finan-
cially capable behaviors did not result in an improvement in the
financial situation of the household.
In this paper, we report results additional to those in French
et al. (2020). These results are based on a refinement of the
DOI: 10.1002/jsc.2430
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any
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© 2021 The Authors. Strategic Change published by John Wiley & Sons Ltd.
Strategic Change. 2021;30:367–375. wileyonlinelibrary.com/journal/jsc 367
estimation approach, which uses ordinary least squares to adjust for
any socio-economic differences between the treatment and control
groups not eliminated by randomization in the RCT. The results high-
light that personal finance apps improve measures used to assess
financial knowledge and skills, attitudes and motivations, and finan-
cially capable behaviors. Those provided with smartphone apps dem-
onstrated increased self-confidence in financial decision-making and
financial literacy and improved their ability to delay self-gratification
and their sense of being able to effect change. Furthermore, finan-
cially capable behavior changes manifested in better keeping track of
finances and managing unexpected bills.
Drawing from the insights gained during the RCT, we also offer in
this paper four ideas to help improve uptake of and engagement with
personal finance apps. First, app development requires a careful blend of
market research to identify a clear target market (user group) that
requires solution(s) to a specific problem. Second, the app's design
should be uncomplicated (app features and behavior change techniques).
Third, the use of game mechanics (a prize-based draw in the case of our
study) and personalization (in the form of two-way push notifications)
are necessary to ensure ongoing user engagement with personal finance
apps. Fourth, synchronizing face-to-face experience with the digital
experience can enhance legitimacy in using personal finance apps.
2|LITERATURE REVIEW
2.1 |Financial literacy and financial capability
Financial literacy reflects how much knowledge one has about various
financial matters. In contrast, financial capability is the ability to apply
that knowledge in a meaningful way resulting in positive financial out-
comes (Spencer, Nieboer, & Elliott, 2015). Someone can be financially
literate (in the sense that they have the knowledge, understanding
and skills which would enable them to manage their finances well)
without necessarily being financially capable, as demonstrated by their
actual behavior (Mundy, 2011). Financial capability is defined as “a
combination of awareness, knowledge, skill, attitude, and behavior
necessary to make sound financial decisions and ultimately achieve
individual financial well-being”(OECD INFE, 2011). In this context,
“knowledge”is the ability to understand personal and broader finan-
cial matters, “skill”is the ability to apply that knowledge in everyday
life, and “attitude and behavior”refers to having the self-confidence
to make appropriate financial decisions (French & McKillop, 2016).
External factors not within an individual's control, including socio-
economic factors and access barriers, may also influence financial
capability (Chidambaranathan & Guha, 2020).
A significant body of research has established that those who are
more financially literate (better financial knowledge, understanding
and skills) have superior economic outcomes (Lusardi &
Mitchell, 2007). Poor money management skills are a strong negative
predictor of the tendency to overspend, worry about financial affairs
and increase financial stress (Garðarsd
ottir & Dittmar, 2012). Poor
understanding of interest rate calculations is associated with higher
debt burdens, incurring greater fees, defaults, and delinquency
(Bucks & Pence, 2008; Campbell, 2006; Disney & Gathergood, 2013;
Duca & Kumar, 2014).
Attitudes, motivations, and biases also shape financial capability
behaviors. Those who are non-impulsive are better financial decision
makers than those who are not because they can delay gratification
to benefit their overall financial well-being (Birkenmaier, Sherraden, &
Curley, 2013). Seeking instant gratification (present bias) over a larger
potential reward in the future can result in impulse spending and
undermine long-term planning and savings (Von Stumm, O'Creevy, &
Furnham, 2013). Mild optimism correlates with a range of good finan-
cial behaviors, such as timely repayment of credit card balance and
saving more (Puri & Robinson, 2007). Having confidence in your abil-
ity to manage your financial situation is key to improving financial
well-being (Fernandes, Lynch, & Netemeyer, 2014; Letkiewicz, Robin-
son, & Domian, 2016). Overconfidence is, however, detrimental.
When overconfidence is present, households may fail to seek financial
advice, fail to save for retirement, or fail to insure themselves against
the potential of loss (Lusardi & Mitchell, 2007). Stress and anxiety
may adversely affect financial capability (Sabri & Zakaria, 2015).
Financial distress is shown to result in outcomes ranging from non-
payment to suicide (Ashta, Khan, & Otto, 2015). Financial stress scales
should be incorporated into the borrower selection procedure
(Utkarsh, Pandey, & Speigelman, 2020).
2.2 |Digitalization and financial capability
Digital literacy is “the ability to effectively and critically locate, evalu-
ate, and create information using a range of digital technologies”
(Bagwell et al., 2014). The improvement of digital literacy is an essen-
tial outcome in the advancement of financially capable behaviors,
“budgeting and spending meters and financial goal trackers”can be
used to enhance money management skills and control finances. In
contrast “interactive online/mobile games can be used to improve
personal financial confidence”(OECD INFE, 2018). Digital technolo-
gies can also be used to nudge consumers into action through “auto-
mated reminders to save or pay back a loan and to enhance
opportunities for financial behavior changes through virtual price/
product/offer comparison and just-in-time reminders at the point of
sale or immediately after”(OECD INFE, 2018).
Although no studies are investigating the efficacy of smartphone
apps to improve financial capability behaviors, two studies assess the
effect of alternative forms of digitalization on financial capability.
Servon and Kaestner (2008), assessed whether access to an online
financial demonstration program, combined with financial literacy
training, could help low- and moderate-income individuals be more
effective financial actors. A small number of qualitative improvements
were identified. Piercy (2018) evaluated the efficacy of online assisted
digital transactions (in the form of online training centers) to improve
financial capabilities. Digital assistance helped increase the confidence
of individuals about their financial future through the building of
financial skills.
368 FRENCH ET AL.
3|RESEARCH METHODOLOGY
The authors collaborated with five NI credit unions, and two local
technology companies developed four personal finance apps to target,
facilitate, and improve different aspects of an individual's financial
capability. The first app provided comparisons of the relative costs of
borrowing across financial providers by amount and time; the second
compared the user's household consumption with NI average spend
in various categories; the third monitored the user's income and
expenditure in order to avoid unauthorized overdrafts while the
fourth suggested an optimal debt reduction strategy for those with
multiple debts. The four apps were packaged together under the title
“Money Matters.”
The effectiveness of these apps was evaluated using an RCT with
working-age members (16–65 years) of Derry Credit Union, the larg-
est Credit Union in NI. Derry Credit Union was not involved in the ini-
tial development of the apps. The trial began July/August 2017,
recruiting 500 participants who were then randomized to receive the
mobile apps (260 in the treatment group) or not (240 in the control
group). A follow-up survey exploring participants' financial circum-
stances, employment, income, attitudes to risk, and household demo-
graphics was conducted in February/March 2018.
4|RESULTS SUMMARY
The apps were evaluated concerning the UK Financial Capability Out-
come Framework (Bagwell et al., 2014). In this model, financial capa-
bility is a combination of ability (knowledge, understanding, and basic
skills) and mindset (attitudes and motivations) as well as external
factors not within an individual's control (access barriers or social
influences). These are then translated into financially capable behav-
iors subject to the constraints of individual financial means and pres-
sures. Changes in these behaviors then result in improved financial
well-being (Figure 1).
This section presents tables of comparisons between the
treatment and control groups in indicators of ability, mindset, and
financially capable behaviors. There was no difference in overall
financial well-being between the two intervention arms. Tables 1–3
give the treatment group proportion reporting the financially capa-
ble result minus the control group proportion reporting this result
while adjusting for any socio-economic differences between the
groups not eliminated by randomization using ordinary least
squares regression (OLS), that is, the tables report βfrom the OLS
regression
yj¼αþβZjþγ0Xjþεj
where yjis our financially capable variable of interest for person j;Zjis
an indicator variable for whether this individual has been assigned to
the treatment (Zj=1) or not (Zj=0); and Xjis a set of socio-economic
variables.
4.1 |Ability (knowledge, understanding and basic
skills)
Ability includes the financial knowledge, understanding and basic
financial skills which are fundamental to making good savings, invest-
ment and money management decisions. These are cognitive skills
such as financial literacy as well as an understanding of financial prod-
ucts and services. A summary of results for ability is given below
(Table 1).
Our first measure of ability asked the respondent if they were
confident that they understood the amount to repay when shown
information about a financial product such as a loan or credit card.
The proportion of subjects in the treatment group expressing confi-
dence in their understanding of how much to repay was almost 22 per-
centage points higher than in the control group. However, this result
is statistically significant only at the marginal 10% level. Our second
measure indicates whether the respondent got three or more correct
from four financial literacy questions (adapted from Lusardi &
Mitchell, 2011). The proportion of those receiving the phone apps
answering three or more correct was 10 percentage points higher
than in the control group. Although the apps were not designed to
improve financial literacy, perhaps engaging in the decision-making
facilitated by the apps increased the user's confidence in their numeri-
cal skills and ability to problem-solving. In contrast, we found no dif-
ference between the two groups on any of the remaining variables
that focused on digital literacy aspects.
To summarize, there was some evidence that the apps increased
self-confidence in respondents' financial decision-making and financial
literacy, but they did not affect their digital literacy.
FIGURE 1 Financial capability framework. Adapted from Bagwell
et al. (2014)
FRENCH ET AL.369
4.2 |Mindset (attitudes and motivations)
Mindset refers to the underlying ways of thinking and aspirations that
influence financial behaviors, including economic preferences such as
impulsivity and materialism as well as more general attitudes that
influence financial management such as self-efficacy and resilience. A
summary of results for mindset is given below (Table 2).
Our first set of seven measures captured aspects of impulsivity.
We see that the proportion of the treatment group stating they pre-
ferred to plan for tomorrow was 9.7 percentage points higher than in
the control group. We also see that receiving the phone apps was asso-
ciated with a reduction in the proportion who said they hated borrow-
ing and would prefer to save. This preference is probably because one
of the apps facilitated borrowing by comparing relative lending costs
across providers. Several of the next set of six variables reflecting the
ability to affect change showed significant differences between the two
arms of the trial. The proportion of the treatment group who disagreed
that they could do nothing about their financial situation was 9.9 per-
centage points higher than in the control group. Those receiving the
apps were also more likely to report that it is important to keep track of
finances (β=0.039) and were happier to use technology in daily
financial decision-making (β=0.117). There were no significant
effects of using the apps for the remaining indicators.
To summarize, there was some evidence that the apps increased
the ability to delay self-gratification and also improved respondents'
sense that they were able to effect change on a number of measures,
but they had no effect on increasing respondents' independence from
consumption influences or their resilience to setbacks.
4.3 |Financially capable behaviors
Individuals with the proper ability and mindset will exhibit financially
capable behaviors as long as their financial circumstances allow. A
financially capable person will keep to budgets; know their income
and expenditure; shop around to maximize income; build up a buffer
to cope with shocks, and plan for the future. There is some evidence
in the previous two subsections that the apps improved ability and
mindset and here we examine whether these changes translated into
better financially capable behaviors. A summary of the results is given
below (Table 3).
Ahouseholdcancopewithanunexpected bill by borrowing or
selling off assets or they could try to absorb the shock by cutting
back or drawing down money from a savings buffer. In the first indi-
cator, we see that the proportion coping with an unexpected bill
without resorting to credit is 22 percentage points higher in the
treatment group, indicating this group is more resilient to financial
shocks. In the next set of five measures, we see only limited evi-
dence of an improvement in how the respondent keeps track of
income and expenses. Those receiving the phone apps were more
likely to check their current account balance regularly (β=0.057).
Differences for the remaining indicators were statistically
insignificant.
To summarize, those in the treatment group were better able to
manage unexpected bills, and there was also some evidence that they
kept better track of their finances. However, there was no evidence
that they better maximized their income by shopping around or built
resilience by saving regularly.
TABLE 1 Differences between treatment and control groups in ability
Theme Variable Coeff. SE
Self-confidence Loan confidence 0.221* 0.123
Financial literacy Financial literacy 0.102** 0.043
Digital literacy Buying online 0.028 0.026
Digital literacy Paying bills online 0.024 0.028
Digital literacy Bank online 0.052* 0.029
Digital literacy Online comparisons 0.059 0.046
Digital literacy Buying online improved 0.036 0.051
Digital literacy Paying bills online improved 0.025 0.052
Digital literacy Bank online improved 0.005 0.052
Digital literacy Online comparisons improved 0.013 0.051
Note: OLS regressions with controls for gender, partner, employed, retired, education, age, and children. Loan confidence “When you are shown
information about a financial product such as a loan, credit card, or store card, how confident are you that you understand the total amount you need to
repay?”(0 =“1. Not confident–3,”1=“4–5. Very confident”). Financial literacy Three or more correct out of four financial literacy questions Buying online
“How would you rate your ability when using the internet for …buying a product online?”(0 =“Fair,”“Poor,”“Bad”1=“Excellent,”“Good”)Paying bills
online “…for paying bills”(0 =“Fair,”“Poor,”“Bad”1=“Excellent,”“Good”)Bank online “…using your bank's online services?”(0 =“Fair,”“Poor,”“Bad”
1=“Excellent,”“Good”)Online comparisons “…comparing financial products and services?”(0 =“Fair,”“Poor,”“Bad”1=“Excellent,”“Good”). Buying
online improved “Over the last 6 months, has your ability to use the internet for the following purposes improved? …buying a product online?”
(“Yes”/“No”)Paying bills online improved “…for paying bills”(“Yes”/“No”)Bank online improved “…using your bank's online services?”(“Yes”/“No”)Online
comparisons improved “…Comparing financial products and services?”(“Yes”/“No”).
*p< .10; **p< .05; ***p< .01.
370 FRENCH ET AL.
5|REFLECTION
On completion of the RCT we reflected on the implementation of
the study, focusing both on those aspects that worked well and
those that did not. To aid reflection, we undertook a post-
intervention survey of participants (reported later) and analyzed
them using data supplied by the app developer. The usage data indi-
cated that 86 (45%) used the apps frequently (five or more times
during the intervention period). A further 61 (32%) used the apps
infrequently (less than five times during the intervention period),
TABLE 2 Differences between
treatment and control groups in mindset Theme Variable Coeff. SE
Attitudes to future Time discounting 0.024 0.043
Attitudes to future Plan for tomorrow 0.097* 0.050
Attitudes to future Hate borrowing 0.078* 0.043
Attitudes to future Save for rainy day 0.009 0.025
Attitudes to future Save for retirement 0.029 0.044
Attitudes to future Buy on impulse 0.097 0.346
Attitudes to future Shop around 0.001 0.025
Ability to effect change Self-efficacy 0.099** 0.041
Ability to effect change Anxiety about finances 0.023 0.051
Ability to effect change Attitude to tracking finances 0.039** 0.019
Ability to effect change Money management confidence 0.087 0.186
Ability to effect change Seek advice 0.019 0.035
Ability to effect change Happy to use tech 0.117*** 0.041
Consumption influences Spend like friends 0.003 0.262
Consumption influences Spend on children 0.397 0.391
Resilience Bounce back 0.006 0.035
Resilience Surviving stressful events 0.002 0.050
Resilience Recovering from stressful events 0.071 0.048
Resilience Snapping back 0.024 0.048
Resilience Coming through difficulties 0.057 0.048
Resilience Getting over setbacks 0.015 0.043
Note: OLS regressions with controls for gender, partner, employed, retired, education, age, and children.
Time discounting Would take £400 in 2 months and not £200 now. Plan for tomorrow “When it comes to
money I prefer to live for today rather than plan for tomorrow”(“Strongly disagree,”“Disagree”). Hate
borrowing “I hate to borrow—I would much rather save up in advance”(“Strongly agree,”“Agree”). Save
for rainy day “How important, if at all, do you think it is to save money for a rainy day”(“Very important,”
“Fairly important”). Save for retirement “How important, if at all, do you think it is to put aside money for
your retirement”(“Very important,”“Fairly important”). Buy on impulse “I often buy things on impulse”
(0–10) Shop around “How important, if at all, do you think it is shop around in order to make your money
go further”(“Very important,”“Fairly important”). Self-efficacy “Nothing I will do will make much
difference to my financial situation”(“Strongly disagree,”“Disagree”). Anxiety about finances “Thinking
about my financial situation makes me anxious”(“Strongly disagree,”“Disagree”). Attitude to tracking
finances “How important, if at all, do you think it is to keep track of your and your partner/spouse's
income and expenditure”(“Very important,”“Fairly important”). Money management confidence “How
confident do you feel managing your money?”(0–10). Seek advice If in financial difficulty “Seek advice
from family and friends”or “Seek advice from a money advice service.”Happy to use tech “I would be
happy to use technology to help me in my day to day financial decision-making”(“Strongly agree,”
“Agree”). Spend like friends “I feel under pressure to spend like my friends even when I can't afford it”(0–
10). Spend on children “I feel under pressure to spend money on my children even when I can't afford it”
(0–10). Bounce back “I tend to bounce back quickly after hard times”(“Strongly agree,”“Agree”). Surviving
stressful events “I have a hard time making it through stressful events”(“Strongly disagree,”“
Disagree”).
Recovering from stressful events “It does not take me long to recover from a stressful event”(“Strongly
agree,”“Agree”). Snapping back,“It is hard for me to snap back when something bad happens”(“Strongly
disagree,”“Disagree”). Coming through difficulties “I usually come through difficult times with little
trouble”(“Strongly agree,”“Agree”). Getting over setbacks “I tend to take a long time to get over setbacks
in my life”(“Strongly disagree,”“Disagree”).
*p< .10; **p< .05; ***p< .01.
FRENCH ET AL.371
while 44 (23%) either did not download or did not use the apps over
the intervention period.
5.1 |Download of apps
This usage data reveals that, eventually, only a relatively small number
of participants either did not download or did not use the apps. This
fact, however, masks the fact that in the first month of the trial only
100 treatment group participants chose to download the apps. The
research team was always aware that getting participants to down-
load the apps might be an issue. Approximately, 400,000 out of
600,000 apps in the iOS App Store have never been downloaded, and
80% of paid Android apps receive less than 100 downloads (Lim,
Bentley, Kanakam, Ishikawa, & Honiden, 2015). Participants were con-
tacted either by phone or email and encouraged to download the apps
and participate in the study. In the absence of this additional interven-
tion by the research team, the study would have had only 40% of the
expected number of treatment group participants.
5.2 |User engagement
The analysis of usage data reveals that 61 (32%) used the apps infre-
quently. Additionally, the data revealed that for the treatment group
as whole app usage was high at the outset and then declined steadily
over the course of the first few months. Again this issue was expected
by the research team. Statista (2020) notes that 25% of apps
downloaded from Google Play were accessed only once during the
first year of ownership. Limited and reducing engagement over time is
also common in healthcare apps trials (Schoeppe et al., 2016). The
research team implemented three reinforcement exercises, regular
push notifications, a financial capability workshop, and a competition
with prizes based upon using the apps to encourage user engagement.
From the outset of the RCT push, notifications were sent to treat-
ment group participants. The nature of these notifications included a
combination of updates on the study, any relevant media updates
highlighting issues and ways to improve financial capability and “did
you know about”features in each of the apps. An example of such
notifications was …“making small changes such as skipping your £3
daily coffee would dramatically reduce the interest you pay on your debts
and the length of time to repay.Try it now with our snowball app.”The
push notifications had, at best, a marginal impact on user engagement.
Perhaps, a shortcoming of the notifications was that they did not
allow for interaction and perhaps could have benefited through a
greater personalization of the apps. In retail, personalization is found
to drive higher conversion and customer satisfaction (Kaiser,
Schreier, & Janiszewski, 2017). However, personalization requires an
understanding of the user's interests. If this was feasible, the apps
could be refined to incorporate 2-way push notifications and mes-
sages that can inform (or remind) users about concepts, advice and
resources.
As an alternative to pushing notifications, the research team
developed material for a financial capability workshop. The workshop
was structured around an evidence-based analysis of financial capabil-
ity, which included opportunities to use the apps at various points in
TABLE 3 Differences between
treatment and control groups in
financially capable behaviors
Theme Variable Coeff. SE
Managing bill payment Unexpected expense 0.119*** 0.045
Keeping track Check account 0.057* 0.034
Keeping track Know balance 0.017 0.048
Keeping track Tracking finances 0.006 0.027
Keeping track Keeping track 0.012 0.043
Keeping track Personal budget 0.046 0.053
Maximizing income Get deal on financial products 0.016 0.045
Maximizing income Get deal on utilities 0.036 0.051
Maximizing income Get other deal 0.003 0.051
Build resilience Save monthly 0.033 0.040
Note: OLS regressions with controls for gender, partner, employed, retired, education, age, and children.
Unexpected expense Pay an unexpected bill of £300 with own money, dipping into savings or cutting back
on essentials. Check account Check how much money in current account “every day”or “at least once a
week.”Know balance Know balance on current account “within a pound or two”or “within £10.”Tracking
finances “Do you keep track of your personal income and expenditure?”(Y/N). Keeping track Regularly
check incomings and outgoings. Personal budget “Do you set a personal budget of how much you
spend?”(Y/N). Get deal on financial products “In the last 6 months, have you tried to get a better deal on
…financial products (for example: current account/credit union account, credit card, savings account,
home buildings/content insurance)”(Y/N). Get deal on utilities “…Household utilities (for example: gas,
electricity)”(Y/N). Get other deal “…other (for example mobile, internet).”Save monthly “Do you
currently save some money each month?”(Y/N).
*p< .10; **p< .05;
***p< .01.
372 FRENCH ET AL.
the programme. Although 15 signed up for the workshop, only four
attended. Those that attended found the workshop both informative
and enjoyable. Key learning from the workshop was that synchroniz-
ing face-to-face experience with the digital experience enhance legiti-
macy in using apps. The workshop increased app use. However, this
was probably due to the promotion of the workshop rather than
attendance at it. In retrospect, attendance at the workshop might
have been better if it had involved a respected local organization such
as Derry credit union. Because of its political history, Derry is an area
of strong cultural community identity, making it more difficult for
“outsiders”(the research team) to be accepted.
The final reinforcement exercise was a prize-based competition.
The competition was structured around financial problem setting.
Seven problems were set and required users to use the apps to deter-
mine solutions. Those getting all seven questions correct were
entered into a prize draw. This exercise took place over 2 weeks, and
85 participants in the treatment group entered the competition. Of
the 85, 29 (34%) got all seven problems correct and were entered into
the prize draw. Three winners were chosen at random to each receive
a£100 gift voucher. This intervention proved highly successful with a
strong increase in usage during both the promotion of the competi-
tion and over the 2 weeks that the competition was open. The suc-
cess of this reinforcement exercise suggests that engagement would
have been improved by staging a small number of competitions over
the course of the RCT, including one at the commencement of the
project to encourage the download of the app.
5.3 |Gamification and the user experience
The prize-based competition's success suggests that apps that
embed a form of gamification may be useful in promoting user
engagement. Gamification is “the process of game-thinking and game
mechanics to engage users and solve problems”(Zichermann &
Cunningham, 2011). Digital healthcare apps, such as Fitbit and
Strava use gamification approaches (adding quests, missions, badges,
rewards, leader boards, and social referral components). Evidence is
also emerging of the potential for gamification in personal finance
apps. Maynard and McGlazer (2017) found that college students
using a financial gaming app that provided challenges, digital badges
for savings achievements and interactive messaging saved on aver-
age 25% more than their peers. Bayuk and Altobello (2019) explored
the types of rewards college students seek in financial gaming apps.
They found that those with financial app experience preferred apps
that emphasized social features (leader boards and ability to share
achievements) and economic features (ability to earn real money or
a higher interest rate). Those without financial app experience were
more motivated by apps with economical features and less so by
those with social features.
5.4 |App features and quality (the view of users)
A post-intervention survey of treatment group participants was
undertaken to assess the features and quality of the apps. A majority
of the treatment group found the apps to be either of good or very
good quality (Figure 2). For those that used the apps infrequently (less
than 5 times during the intervention period) infrequency of use was
mainly due to either “forgetting about the apps”(24%), “having an inter-
est in digital technology but no interest in the apps”(13%) “forgetting
what the apps were for”(11%), or finding the apps difficult to use (9%).
This group also reported that they would have used the apps more “if
the information provided by the apps was of greater relevance”(35%),
“if they had more confidence in interpreting the information provided”
(21%) and “if they were in financial difficulty”(16%).
The finding that the apps would have been used more often “if
the information provided was of more relevance”suggests that the
research project may have been overly ambitious. In the trial, four
mobile apps were targeted at different facets of financial decision-
making, covering different stages in an individual's financial journey.
Rather than extending to different aspects of financial decision-mak-
ing, a more effective approach might have been to restrict the trial to
one app and participants, all of whom had a pre-specified financial
problem.
FIGURE 2 Assessment of app quality
[Color figure can be viewed at
wileyonlinelibrary.com]
FRENCH ET AL.373
The finding that some users viewed the apps as “difficult to use”
and would have used them more if “they had greater confidence in
interpreting the information provided”suggests a preference for simple
and easy to use apps. The literature highlights that the efficacy of
using smartphone apps declines when too many features or tech-
niques are implemented (Schoeppe et al., 2016). However, there now
is little consensus on an optimal number and combination of app fea-
tures and behavior change techniques (Dunn, Gainforth, & Robertson-
Wilson, 2018).
5.5 |Other limitations (duration of the RCT, target
group)
Due to the requirements of the research funding body, the RCT was
constrained to a duration of 1 year. In part, this may explain why the
investigation, although finding improvements in “financial knowledge,
understanding and basic skills,”“attitudes and motivations,”and
“financially capable behaviors”did not find an improvement in the
overall financial situation of the household (i.e., a reduction in indebt-
edness, money of at the end of the month). Pham, Wiljer, and
Cafazzo (2016) review clinical trial methods on health aspects find
that the average trial duration is 20 months.
The RCT was based upon working age (16–65) members of Derry
Credit Union. Credit union members are generally of modest means and
fall into the struggling and squeezed segments of the population. Many
members also have limited financial capability (French &
McKillop, 2017). Schoeppe et al. (2016) suggest that the efficacy of using
smartphone apps is dependent upon socio-demographic factors
(e.g., sex, age, education) and psychosocial factors (e.g., attitudes, per-
ceived benefits and enjoyment). Sandholzer, Deutsch, Frese, and Win-
ter (2015) note that higher app usage is associated with being female
and younger and with a personal interest in new technologies, positive
attitudes toward smartphone apps and perceived benefit of use. This
observation suggests that if the trial had been restricted to credit union
members classed as “young adults”the efficacy of the apps in enhancing
financial capability behaviors might have had a more significant impact.
6|CONCLUSION
The results of the RCT has significantly improved our understanding
of people's attitudes and behavior toward digital interventions to
improving financial capability. There was evidence that the apps
increased self-confidence in respondents' financial decision-making
and financial literacy, but they had no effect on their digital literacy.
There was also evidence that the apps increased the ability to delay
self-gratification and improved respondents' sense that they could
affect several measures. However, they did not affect increasing
respondents' independence from consumption influences or their
resilience to setbacks. In terms of financially capable behaviors, it was
found that the apps resulted in respondents being better able to keep
track of finances and manage unexpected bills, but there was no
evidence that they better maximized their income by shopping around
or built resilience by saving regularly.
As the RCT was only 1 year in duration, it was perhaps not sur-
prising that the results did not generate large changes in financially
capable behaviors. In reflecting upon our work, we concluded that
user engagement could be improved by greater simplicity in the
design of the apps, concentration on those with a specific financial
decision making problem, the incorporation of game mechanics into
the apps and personalization of the apps to encourage ongoing user
engagement.
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AUTHOR BIOGRAPHIES
Declan French is a reader in finance in the Queen's Management
School in Queen's University Belfast, and director of the Queen's
University Centre for Health Research at the Management School
(CHaRMS). His research interests include health economics and
household finance.
Donal McKillop is professor of financial services in the Queen's
Management School in Queen's University Belfast, and director of
the Queen's University Centre for Not-For-Profit and Public-
Sector Research (CNPR). His research interests include not-for-
profit financial institutions and household finance.
Elaine Stewart is a lecturer in accounting in the Queen's Manage-
ment School in Queen's University Belfast, and a member of the
Queen's University Centre for Not-For-Profit and Public-Sector
Research (CNPR). Her research interests include public sector
accounting reforms and household finance.
How to cite this article: French, D., McKillop, D., & Stewart, E.
(2021). Personal finance apps and low-income households.
Strategic Change,30(4), 367–375. https://doi.org/10.1002/
jsc.2430
FRENCH ET AL.375
