Personal finance management report

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Personal finance management (PFM) tools can enable banks to create highly personalized customer experiences and, in turn, drive revenue and loyalty.

The diversity of today’s PFM market illustrates the value that a wide range of vendors see in developing such offerings, but its promise – PFM has been hailed as the


the future of banking

for more than a decade – a long time failed to materialize for most incumbent banks as well as for consumers. The share of PFM users stabilized between 10% and 12% in 2017, the most recent data available, by Celent.

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This plateau is the result of several design flaws that have made previous iterations of PFM tools uninviting. These include showing users only their financial data without providing actionable insights, personalized financial advice, or tools to manage their finances more easily; poor user experience (UX) due to many banks’ PFM features being confined to separate tabs to better track engagement metrics; and limited data sharing before open banking regulations (in some jurisdictions), making personalization difficult to achieve due to incomplete financial data for each user.

However, today’s most sophisticated PFM features can give users maximum control over their finances while requiring little effort from users thanks to advances in AI, intelligent analytics, automation and regulations such as open banking. A new generation of PFM vendors are building on these developments to deploy features that are more insightful, accurate, and predictive than before, making it a powerful tool for getting consumers to engage with their finances in meaningful ways. Customers are reacting to this improved version of PFM, and banks need to be careful or they risk eroding customer engagement and loyalty. As customers interact with their finances in more meaningful ways, banks can translate that increased engagement into more revenue.

In the Personal Financial Management Disruptors report, Insider Intelligence provides an overview of the major categories of players shaping the PFM market today. We go on to outline some of the best practices for banks looking to upgrade their PFM offerings, based on exclusive interviews conducted with seven leading PFM vendors. We then introduce the PFM Digital Maturity Model to show banks and other providers the standards they should aim for when building new PFM capabilities to delight customers. We go on to explain why banks should reinvest in PFM and why they cannot afford not to. Next, we look at eight sophisticated PFM features that we believe bring significant value to customers and banks today, enriched by our interviews with the companies that provide them.

Companies mentioned in this report include: Cleo AI, Greenlight, Meniga, Minna Technologies, N26, Personal Capital, Personetics and Strands.

Here are some of the key takeaways from the report:

  • PFM tools enable financial service providers to create highly personalized customer experiences and in turn drive revenue and loyalty, but banks are falling short of customer expectations. Consumers are more dissatisfied with the PFM services of their banks than any other type of service they provide, and more than 40% of respondents said they find the PFM services of non-bank providers more helpful and useful , according to Oracle.
  • There is, however, a strong demand for PFM tools provided by banks, suggesting that banks should revisit PFM tools as a core value proposition. More than 75% of respondents to an RFi survey cited by The Financial Brand said they would prefer to use PFM tools from their primary financial services provider (usually a bank). This compares to just 6% who said they prefer PFM tools from fintechs or neobanks.
  • The more banks can use highly mature PFM tools, the better able they will be to seize the significant opportunity at hand. They can specifically achieve ROI on their PFM investments in two key areas:
    • Loyalty of the clientele: 71% of Gen Zers believe brands should “help them achieve their personal goals and aspirations, according to data from PSFK. Thus, integrating personalized information and advice into banks’ PFM products would create substantial customer value.
    • Increase in customer lifetime value: On average, bank customers who use PFM tools are 18% wealthier than those who don’t, according to Javelin Research data cited by MX, and they tend to own all major financial products, such as mortgages and car loans, which are the banks’ main sources of income.

In full, the report:

  • Provides best practices for banks looking to upgrade their PFM offerings to bring more value to their customers.
  • Provides an overview of the key business types that are shaping the cutting edge of PFM in today’s crowded marketplace.
  • Introduces the digital PFM maturity model to help banks understand what separates mature features from basic PFM features.
  • Explains why reinvestment in PFM is imperative for banks and what they can gain from it.
  • Examines winning strategies for implementing sophisticated PFM features, based on exclusive interviews.

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