A Clear Trend that Banks are moving towards PFM
PFM’s critically important, it’s a vision of the future of online banking”,
Emmett Higdon - senior E-Business analyst at Forrester who says about 50 percent of the banks Forrester talks to are interested in PFM.
The US is leading the way with more than a hundred retail banks rolling out PFM solutions in the past year. Europe is behind the USA in terms of PFM awareness as only a handful of credible PFM offerings have emerged in Europe and most markets still have no PFM service. BBVA (Spain) and Íslandsbanki (Iceland) were first to offer comprehensive PFM functionality to their customers and in both cases PFM became an instant success. ING (Netherlands) also recently started offering PFM.
“BBVA‘s Tú Cuentas [online PFM solution launched by the Spanish bank BBVA] shows what next generation of online banking will look like“,
Forrester Research, July 2009
Customers love PFM, particularly during tough economic times, and reward the bank that offers it to them.
Researchers at the Online Banking Report predict that online PFM use will grow from 13 million households to 26 million in the next five years.
Online Banking Report, May 2010
80% of consumers say they would prefer to manage their finance through their financial institution.
Forrester Research
“Javelin data illustrates that financial institutions that install compelling personal finance management tools stand to reap the benefits of increased customer loyalty, higher usage, lower costs and added revenue.“
Javelin Strategy & Research, September 2009
“Personal Finance Management (PFM) functionality is the highest potential ROI project for retail financial institutions to implement in 2010.“
Online Banking Report, May 2010
“[PFM] can be an even more powerful retention technique than other online features, even bill payment. Why? The average user with a dozen or so payees could move their bill payment account to another bank with an hour or two of work. But with current practices, it’s much more difficult, if not impossible, to move transaction history to another bank.“
Online Banking Report, May 2010
A study by Javelin Strategy and Research shows
Banks and credit unions are best situated to offer PFM
Consumers are hungry for personal finance management tools that will give them greater control over their financial destiny. Software vendors and PFM websites are vying to provide such tools, and their offerings are often compelling and practical. But none of them is better situated than banks and credit unions to use online and mobile banking to give customers the financial control they crave.
Consumers want to simplify their financial chores
Consumers want fewer financial relationships, not more. They want to consolidate and simplify their financial chores. And they place a great deal of faith in banks and credit to keep their personal data secure. PFM tools can drive usage and cement customer relationships.
Consumers trust banks more
When it comes to security, consumers trust banks more than PFM websites by a 2-to-1 margin. Nonetheless, the popularity of PFM Web sites continues to grow, a phenomenon that could erase the banks’ trust advantage.
Cross-selling accounts
PFM users are significantly more likely than others to open savings accounts and apply for a major credit card.
Banking is a subset of managing money
Banks should give personal finance management tools first-class status. Banks have defined personal finance management as a subset of their customers’ online-banking experience, but that is not how customers see it. To consumers, banking is a subset of managing their money. PFM capabilities will be most effective if customers see them simply by logging in. It is critical that potential users be able to stumble upon these tools and immediately reap value from them without the investment of time that a more motivated do-it-yourselfer would commit to.
