The Bankwatch

Tracking the consumer evolution of financial services

The challenge for PFM lies in seamless integration with OLB

The promise of Personal Financial Manager tools (PFM) for banks has been long predicted but slower to be adopted by customers.  This has been a natural outcome because most if not all banks have taken the route of purchasing or partnering with software suppliers.  The result has generally been as highlighted in this American Banker piece that PFM exists in a separate tab within online banking. 

With most customers used to going straight to bill payment or transfers it is only natural that the PFM tab will get less use.  Regions bank have introduced charts from their PFM offering that appear on the OLB home page.

Regions Bank to Tie New PFM Tools to Online Banking

To draw attention to the Insights tab, Regions provides online banking customers with pie charts of their transactions on their online banking home page, teasing to the Insights section to encourage the customer to click on it.

This has increased interest, but it seems to me that integration throughout OLB would be the real answer.  That presents an infinite number of technology problems for banks unless they are prepared to modernise their OLB architecture to accommodate these new offerrings which are built with new technologies.

The other challenge which is an even greater hurdle is that the definition of PFM is far too broad and frankly irrelevant to the average consumer.  This was evidenced by the original uptake of Quicken software which flatlined at something like 14% +/1.  The idea that in effect taking a ‘Quicken’ type all inclusive offerring and making it a tab within inline banking and expecting it to have immediate uptake is of course absurd.

First Look: PFM Defies Definition

I, for one, could care less about pie charts or categories showcasing the ways in which I spend. I refuse such intimacy with my transactions. All I want to know is: am I spending more than I’m saving? In other words, let me have my Jameson indulgences if I’m prudent with my overall credit card spend. Categorizing my spending choices hinders my lifestyle choice. And yet, I’ll log into my digital banking a few times a week to ensure I haven’t lost my credit card mind. To me, logging into online banking is PFM. And it’s enough for now

Its just one journalists view in this other AB article but it makes the PFM discussion real.  People trust and use their online banking, particularly using mobile now.  Somehow PFM software needs to be able to make OLB come alive for clients without being PFM.  It should just be OLB with PFM capability seamlessly integrated.

Written by Colin Henderson

January 26, 2013 at 13:05

Posted in Uncategorized

6 Responses

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  1. PFM could be a helpful tool for consumers if it was tightly integrated into the overall banking offering (not just OLB) and specifically marketed to select demographic segments that might find the functionality interesting beyond the initial “gee-whiz” moment.

    But it is still not at all clear when or how PFM will help banks (and credit unions) improve loyalty (based on measures such as wallet share), revenue, and ROE. Deploying a feature / function just because other FIs are doing it is… imprudent…

    Serge Milman | Optirate

    January 27, 2013 at 23:32

  2. Respectfully disagree with you here. Integrating PFM and online banking is a nice thing to have, but the lack of integration is not what’s holding PFM back. At least not here in the US (couldn’t talk to Canadian consumers’ PFM usage).

    In the US, the biggest problem PFM have is the fact that people aren’t that engaged in the management of their financial lives, and therefore, have little need for what PFM (as it currently exists) offers.

    I say “as it currently exists” because most PFM tools focus on budgeting and expense categorization, and pretties that all up with charts and graphs. Problem is, most Americans don’t manage a household budget (after Jan 31), and don’t care about categorizing expenses.

    What people want is tips and tricks on how to save more money, and where the deals are (both retail and financial). Until PFM starts to deliver useful advice and guidance, it won’t hit mass adoption.

    And it doesn’t have to be integrated into OLB for that level of adoption to occur. Mobile apps — segregated from OLB — will do just fine.

    Ron Shevlin

    January 28, 2013 at 08:08

  3. One of the few times where I have to disagree with Mr. Shevlin. Most Americans don’t manage household budgets because there isn’t much to manage. The reality is that most households have little or no disposable income … thus little or no need to manage a budget. This is one of the reasons why PFM is attractive to only a select consumer demographic that is interested in managing their budget. Integrating PFM into the core offering drives the likelihood of adoption; communicating the value of the solution to the right demographic is the only way to maintain usage. (to be clear, mobile – essentially balance check, maybe RDC and maybe intra bank account transfers – do not need integration into OLB as the offerings are rudimentary and utilitarian in nature)

    I wholeheartedly agree that it is nice to have nice bar & bubble charts showing one’s spending patterns, but it is not enough to drive adoption of the tool, and certainly far from enough of generating any meaningful value for the Financial Institution providing the tool.

    The funny thing about saving money is that when one’s disposable income is near zero (or less than zero) it is very difficult to save. Neither PFM nor tip / tricks will solve this challenge.

    As is always the case, deploying a feature / function typically fails to deliver the benefits vendors claim in their glossy brochures. Financial Institutions need to pause the spending on the “newest shinning objects” and refocus on developing business strategies that benefit their customers and ultimately benefit their bottom line.

    Serge Milman | Optirate

    January 28, 2013 at 10:01

  4. Thank you Ron for making my point. PFM as a concept is something everyone wants some of, but few want the work. My point about integration is that PFM capabilities that were apparent and seamless for clients would have greater chance of appealing to the 86% or whatever that are not willing to take on the work associated with traditional PFM.

    Breaking PFM up into components that would be seamless would require much work and getting inside the actual benefits of PFM but I am assuming at some level there would always be at least one of those components that would appeal to most clients.

    Colin Henderson

    January 28, 2013 at 12:45

  5. Wow. Based on his comments, I thought Serge and I were actually in agreement. And I thought Colin and I were disagreeing, but he says I helped him make my point.

    I am now officially TOTALLY CONFUSED. 🙂

    Ron Shevlin

    January 29, 2013 at 15:54

  6. um… shoulda been “…helped him make HIS point.” in my previous comment.

    Ron Shevlin

    January 29, 2013 at 15:55

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