“22seven helps consumers understand their money decisions better.” With CEO Christo Davel in Cape Town, South Africa, Club Africa discusses behavioural economics, the market for an app that does accounting for you, and the reason why 20,000 South Africans have already subscribed to his service.
“At 22seven, we are not the first to claim that human spending behaviour is driven by emotions. In scientific circles, it is a widely accepted hypothesis that the human mind cannot be logically explained”, says Christo Davel, whose company was founded in January 2012 and still is in the start-up stages. “Keynes was the first to upset traditional economists when he declared the market irrational. There is strong evidence that the great depression was caused by greed, a need for instant gratification, and a herd mentality. Drawing the link between behavioural economics and patterns in customers’ personal money decision-making – that is where the gap is for us. 22 over seven is the approximation of pi, the mathematical embodiment of irrationality.”
More cash at the end of the month
Although 22seven is not a drug for greed, it is an extremely helpful tool to analyse a user’s expenditures, and allow for rational decision-making in line with personalised financial goals. It is consumer-focused, and comes in the form of a web and mobile app. Once all accounts, cards and investments have been entered, the entirety of a user’s personal financial administration will be in one place. Transactions are automatically categorised, and analysed accordingly. The result: “More cash at the end of the month!”, says Christo. “For example, in South Africa the banking industry is an oligopoly. The five biggest banks control the market. What turns out is that I am charged exorbitant fees when I withdraw cash from an ATM that does not belong to my issuing bank. Having been made aware of this cost by 22seven, I now save a couple of thousand Rand since I began using the app.”
At the moment, 22seven applies a business model that offers the service for free for the first 30 days. When that period ends, users are charged 25 Rand – about US$ 2.50 – a month. In the long term, 22seven will switch to a ‘freemium’ model, so that, as with services like Evernote and Dropbox, users get the basic app for free, but start to pay once they want to make use of additional, premium services. Is it accessible exclusively for the wealthy? Christo: “22seven cuts across income demographics. Whether rich or poor, saving money because of increased spending behaviour awareness will help at any income level.”
Users’ personal data
In order to convince prospective South African subscribers that they can entrust their most intimate financial data to 22seven, the company teamed up with American software company Yodlee. “Yodlee has 40 million customers worldwide, and is regulated like a bank”, says Christo. “No human eyes will ever see our users’ personal data. When GPS maps had just been introduced to the public, humorous stories of people driving into canals were countless. As the service improved over time, people gained trust and confidently use GPS systems today. I am hoping to have the same success with 22seven.”