7 common misconceptions about financial apps

Financial technology has transformed how we manage money, making tasks like budgeting, investing and bill payment more efficient and transparent.

Yet, there are still plenty of misconceptions about financial apps that can leave people skeptical or reluctant to adopt them. Are they really safe to use? Do they require sharing all of your personal data? Is the learning curve too steep?

This guide examines seven common myths about financial apps and explains why embracing these tools can help you better manage your finances.

1. Financial apps aren’t secure

One of the biggest myths floating around is that once you install a financial app, your money and personally identifiable information (PII) are automatically at risk. While no system offers complete immunity from cyber threats, reputable financial apps maintain strong security records and employ robust protection measures.

Key security features to look for:

• Compliance: Most reliable fintech companies comply with regulations like the Payment Card Industry Data Security Standard (PCI DSS) and other regional financial rules. Specifically, when dealing with financial apps, look for SOC 2 certification — a confirmation of the company’s compliance with leading industry standards to protect consumer data against unauthorized access, cyber-attacks and other threats. That’s your best bet for making sure your information will be safe.
• Two-factor authentication (2FA): Leading financial apps use the same encryption standards that major banks rely on. This means hackers have a tough time breaking in. With multi-factor authentication, you’d typically go through at least two steps of verification — like a password or PIN plus an authentication code — to access your account. Many apps also let you set up biometric logins (fingerprint or facial recognition) for additional layers of defense.
• Data deletion: With a reliable budgeting app, you should be able to delete all of your information when you close the account (and it should be easy to do so). Before signing up, confirm the app outlines exactly how to do this.

2. Financial apps are too complex

Another widespread worry is that financial apps might be too complicated for everyday users. However, many of today’s fintech solutions are designed to be intuitive.

For example, payment apps like Venmo simplify bill splitting with just a few taps. While we recommend keeping your account private, these tools often prove more straightforward than traditional banking methods.

Still, if you’re new to money management apps, these standard features will typically have your back:

• Intuitive interfaces: Most financial apps follow familiar design principles, making it easy to navigate menus, check balances and schedule payments.
• Built-in tutorials: Many apps provide step-by-step guides, FAQs or pop-up tips so you can master the features without a learning curve.
• Customer support: Most financial apps have chatbots, online forums and help desks for extra help when you need a walkthrough. PayPal, for instance, has a help center, an online messaging feature, a resolution center and even the option to call customer support.

Don’t let fear of technology slow down your financial goals. Start small, like checking your balance or setting up bill pay, and then branch out into other features as you get comfortable.

3. Financial apps harvest personal data

While privacy concerns are valid, there’s often confusion about how financial apps collect and handle information.

Many older or less reputable tools use screen scraping, which involves collecting information directly from websites using login credentials, sometimes without strict oversight.

However, screen scraping is being phased out in the United States under Dodd-Frank Act Section 1033. Most established apps now use financial APIs, where your bank or credit card company grants permission for specific data to be shared securely. Think of it like a locked window that only lets certain details pass through rather than an open door where everything is up for grabs.

Plus, regulations like General Data Protection Regulation (GDPR) in Europe and California Consumer Privacy Act (CCPA), require legitimate apps to adopt strict data-sharing policies. You’ll often find opt-in settings to choose what you’re comfortable sharing.

In short, well-designed fintech solutions give you valuable features while protecting your privacy. Still, it’s always worth reviewing your app’s permissions and privacy policy before downloading, as practices vary between platforms.

4. Traditional banks are safer than financial apps

The belief that conventional banking offers more security than digital platforms doesn’t tell the whole story. Digital banking platforms, including neobanks, often provide advantages over traditional methods:

• Real-time transaction alerts
• Personalized financial products
• Lower or zero monthly fees
• 24/7 account access

To give you a sense of the momentum behind digital-first banking, the neobanking market expects to reach $6.37 trillion in transaction value by 2024, with 386.3 million users projected by 2028.

That said, it’s not an either-or choice. Many traditional banks now provide robust mobile apps, letting you enjoy the convenience of digital access with the familiarity of a local branch.

5. Switching to a financial app is expensive or time-consuming

Many people assume transitioning to digital banking requires significant time and money. In reality, most popular financial apps are free to download with minimal setup fees. Connecting your existing bank account often takes just minutes by entering your login credentials.

Take Chime, for example. Users can open an account through the app or website quickly and access features like free overdraft protection, early direct deposits and instant transfers to other Chime users. When you factor in potential savings on monthly service fees and ATM charges, shifting to an app-based platform starts to look a lot less daunting — and potentially more budget-friendly in the long run.

6. Financial apps limit your access to account services

People often assume that financial apps only cover the basics, such as checking your balance or moving money around. In reality, today’s fintech offerings run far deeper, including:

• Advanced budgeting tools, which allow you to track your daily expenses in real time, set personalized limits and receive instant alerts so you don’t go overboard.
• Automated savings features that round up each purchase to the nearest dollar and stash the difference or schedule regular transfers into a rainy-day fund.
• Credit score monitoring to help you keep tabs on your credit health for free and get tailored suggestions for boosting it.
• Virtual financial advisors that can automatically manage your portfolio, factoring in your individual risk tolerance and long-term goals.

Take SoFi — it’s not just a place to deposit checks or transfer funds. Once you sign up, you gain access to automated investing, free credit score tracking and even personalized career coaching. That means handling everything from day-to-day budgeting to long-term financial planning, all under one digital roof. These digital platforms often consolidate multiple financial services under one login, streamlining money management.

7. Financial apps are only for tech-savvy users

Contrary to popular belief, you don’t need extensive technical knowledge to benefit from financial apps. Here’s why:

• User-focused design: Today’s apps prioritize clear navigation and simple interfaces. That means clear buttons, straightforward menus and prompts that guide you step by step. Sending money or checking your balance can be as simple as tapping a screen.
• Accessibility settings: Many apps feature larger font sizes or voice-command capabilities, making them friendly for a wide range of tech comfort levels.
• Growing use across age groups: Financial apps aren’t just for college students anymore. Case in point: In Canada, the share of older adults using online banking jumped from 62 percent in 2018 to 70 percent in 2022.

Think of it this way: if you can text or shop online, you can master a financial app. The learning curve is minimal, and the time savings are substantial.

The bottom line

Financial apps have evolved from basic tools into secure, robust platforms that often come at little to no cost. Whether you’re worried about data breaches or you assume online banking can’t compare to a brick-and-mortar branch, those misconceptions often stem from outdated information.

Understanding the real benefits these apps offer helps you make informed decisions about incorporating them into your financial routine. Most users find that digital money management provides greater efficiency and transparency than traditional methods.