Can a Mobile Banking App Really Save You Money?

Based on research by Bruce Carlin, Arna Olaffson (Copenhagen Business School) and Michaela Pagel (Washington University)

Key findings: 

• Within 24 months of an Icelandic banking app’s release, user NSF fees dropped by 38.4%.
• Certain groups benefited more from the app. Women, high-income individuals and baby boomers saw the biggest gains.
• The app improved financial choices by lowering information costs, not by increasing financial education.

If you’ve ever been hit with a surprise overdraft fee, you’re not alone. According to a December 2023 report by the Consumer Financial Protection Bureau (CFPB), roughly a quarter of U.S. consumers reside in households that were charged an overdraft or non-sufficient funds (NSF) fee that year. The same report also finds that people who are more likely to be economically disadvantaged — those with lower incomes, less education or who are non-white — were more likely to live in households that incurred a fee.

Often, these fees aren’t the result of reckless spending but rather of timing and consumer awareness. A forgotten subscription charge? An automatic bill payment? And suddenly you’ve tipped into the red.

For years, mobile banking apps have flooded the market, aiming to help consumers keep their account information all in one place. But have they helped with financial planning and decision making? Do they help people avoid the dreaded overdraft or NSF fees?

According to a new study from a team that includes Rice Business professor of finance Bruce Carlin — they can. Published in The Review of Finance, the 2023 paper finds that when consumers use a financial mobile app that consolidates their accounts — checking, savings and credit cards — NSF fees go down. 

How One App Changed Consumer Behavior

Tracking how many people download a financial app is simple; understanding how that app affects their financial choices is much more complex. To investigate this, Carlin partnered with Arna Olafsson from Copenhagen Business School and Michaela Pagel from Washington University in St. Louis to analyze transaction data from Meniga, a financial aggregator used by consumers in Iceland.

Meniga allows users to link their checking, savings and credit card accounts in one place. In 2014, the company released a mobile app to complement its web-based platform, making it easier for users to check their financial status on the go. The app didn’t include alerts or push notifications to encourage behavior changes — just a more convenient way to access financial data. 

After the app’s release, Carlin and his colleagues observed a notable shift in user behavior: people logged into Meniga more frequently, and their financial decisions improved as a result. “It’s about reducing friction,” Carlin explains. “When checking your balance becomes as easy as checking social media, you’re more likely to do it.”

After adopting the Meniga app, users saw a drop in NSF fees. NSFs are a specific type of overdraft fee, but they work differently. With overdraft fees, the bank covers a purchase even when the customer doesn’t have enough funds. In contrast, when the bank charges an NSF fee, they decline the charge.

A Sharp Decline in NSF Fees

The Meniga dataset is a compelling one, according to the researchers, because in Iceland, most consumers make purchases electronically and they use internet banking. Carlin and colleagues studied a subset of 13,411 active Meniga users from November 2011 to January 2017 with complete records that include key demographic data and a credible consumption stream. 27.4% of customers had an NSF charge during the period.

Within 12 months of the Meniga app release, NSF fees (about $8 or $9) fell by 14.1% per individual. Within 18 months, fees fell by 26.8%, and within two years 38.4%. “NSF charges are interesting because they represent an unambiguous mistake,” Carlin says. “The consumer suffers a cost with no benefit. By contrast, overdraft interest or late fees (which we also analyze) allow the consumer to make their purchase — or, in essence, to borrow money — and therefore receive a benefit.”

Notably, the study found that certain groups benefited more than others. Women, high-income individuals and people born in the baby boomer generation benefitted the most. Individuals who incurred higher fees before the app’s introduction experienced more fee relief from the new tech, as well. “It seems that people who were struggling the most with overdrafts had the most to gain,” Carlin notes.

Interestingly, while NSF fees dropped with the app’s release, overdraft interest charges and late fees on credit card payments increased slightly. One possible explanation is that as Iceland’s economy expanded, consumers were more willing to take on short-term debt, viewing the costs as manageable trade-offs for other financial benefits.

The Big Picture

Still, the overall impact of the app was positive. Carlin and his colleagues believe their findings have important implications for both consumers and fintech companies. 

“The real takeaway is that access to information matters,” says Carlin. “When people have a clearer picture of their finances, they can make better decisions. And when fintech companies build tools that prioritize accessibility and ease of use, they’re not just creating products — they’re helping improve financial outcomes.”

For consumers, the study underscores the value of financial aggregation tools. While flashy features like budgeting algorithms or spending alerts can be helpful, sometimes the simplest solution — better visibility — can make the biggest impact.

Carlin, Olafsson, and Pagel. “Mobile Apps and Financial Decision Making.” Review of Finance 27.3 (2023): 977-96. https://doi.org/10.1093/rof/rfac040.