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The future for Personal Financial Management? 

In September 2011, Yodlee announced the availability of Yodlee FinApps, giving Financial Services companies the ability to develop more creative Personal Financial Management (PFM) sites which are tailored to their customers' needs. This marked the latest stage in the development of PFM functionality which has seen Yodlee, in association with its partners, acquire 26 million customers. Yodlee is not alone in seeing strong growth with reaching over 1 million users, with US $47bn of registered assets and adding 3,000 new customers daily.

The reason for such growth is simple – PFM offers customers an easy, one-stop view-on-a-page of their assets and liabilities: from current accounts and mortgages right the way through to supermarket loyalty points and airmiles. It also provides powerful money management and budgeting tools which are clearly attractive customer offerings in today's economic downturn.

However, whilst some players have enjoyed significant success, other PFM sites have struggled to attract enough users to ensure long term viability. Recent research from Fiserv suggests this is because consumers would prefer to use PFM tools through their existing bank's online services rather than through non-bank providers. In spite of this, many banks have been slow to roll out PFM functionality. Of the major UK banks, only Lloyds Banking Group has made a foray into the area with the roll out in April of its Money Manager proposition. So why should banks add PFM functionality to their websites?

Customer Benefits

Bank Benefits

  • Simplicity – a better understanding of their finances.
  • Transparency – more clarity to make informed choices.
  • Control – more effective financial management.
  • Engagement – immersive experience that makes personal finance interesting.
  • Immediacy – comprehend and make decisions by 'de-cluttering' financial data.
  • Customer acquisition – making banking more interesting attracts customers.
  • Lower costs – encourage self-service by providing engaging finance tools.
  • Cross selling – better targeted product propositions based on insights from PFM use.
  • Brand engagement – capture customer mind share with compelling PFM offerings.

The customer value of PFM appears clear, as do the benefits that PFM can bring to banks looking to provide added value services that strengthen their customer relationships. With the functionality in its infancy, banks have the opportunity to be at the vanguard of the development of PFM services, but banks which continue to delay developing a PFM offer may do so at their peril.

By Marty Carroll, Principal Advisor in the UK

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