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SA online personal finance tool market heats up

By , Editor, ITWeb Africa
South Africa , 01 Nov 2012

SA online personal finance tool market heats up

Competition in the online personal finance management tool space has notched up a level in South Africa today after the country’s accounting software firm Pastel entered this market.

In January, South African startup unveiled its online personal finance tool that uses slickly designed digital graphs to help users better manage the spending of their hard-earned cash. Users of 22Seven also pay a monthly subscription fee to use the service, which is independent of banks.

The startup, though, received intense criticism at the time for requiring users to enter their internet banking login details. 22Seven officials also did not consult with banks about what they were planning to offer, resulting in financial institutions such as ABSA warning customers to shun the service for security reasons.

Founder of 22Seven, Christo Davel, throughout the debacle stressed the safety of his service, as he explained that it is using account aggregation service Yodlee. Yodlee as a service intends to ensure that internet banking login details of, for instance, 22Seven users are never capable of being viewed by anyone else.

The storm around 22Seven did, however, die down, and ten months later the likes of financial institution Nedbank unveiled its personal finance tool, dubbed ‘My Financial Life’.

Now Pastel has also entered this market, with the online product also requiring users internet banking login details to use the service.

Yet compared to 22Seven, My Money is free, as Pastel Accounting managing director Steven Cohen explained.

“For them (22Seven) it was about actually making money out of personal finance; for us this thing’s been like a fun project,” said Cohen.

He added that the free offering is intended to be a hook to attain customers for his firm’s Sage Pastel Online hub, which provides businesses with one central location to access the company’s bouquet of cloud-based business tools.

The hub offers online accounting, payroll, personal finance and marketing services as well as Black Economic Empowerment (BEE) certification.

He also says that take up of the firm’s online personal finance tool has been promising thus far, with 10% of the firm’s users signing up for it since Monday.

Cohen, though, says that his company is not going to be 22Seven’s last competitor.

“ABSA’s going to do their own thing, Standard Bank going’s to do their own thing, First National Bank’s doing their own thing, and apparently so is Discovery doing their own thing.

“So, this is going to be interesting, everyone is wanting to climb onto the personal finance bandwagon, but where we’ve got the edge is that we’re agnostic,” he added.

In an interview with ITWeb Africa late last month, Christo Davel acknowledged that more competitors could enter his firm’s industry space.

“It’s going to become prolific in the sense that I think more and more big players are going to do this, because it just makes sense,” he said.

“The question then is going to be who is going to be the best for the end-user. And I think that’s where I can’t wait for that to happen, because I think then whoever designs the best service will gather the most followers,” he noted.

Information Technology analyst at Frost & Sullivan, Mervin Miemoukanda, says that another competitor in the personal finance management tool space is one sign of many that the idea of cloud computing is becoming more acceptable in South Africa.

Security concerns are not as prominent as they used to be about cloud services such as Pastel's My Money, said Miemoukanda.

“If you look at it compared to the last five years, they are more confident and they are well acquainted with cloud now,” he told ITWeb Africa.

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