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What Consumers Want in PFM Tools (Hint: Not Pie Charts)

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The 21st century called — it's over the Quicken-like personal finance management (PFM) user experience that originated nearly four decades ago.

"The PFM of 1980 is not the PFM of 2013 and beyond," Mark Schwanhausser, director of multichannel financial services at Javelin Strategy & Research, tells BTN. "The old definition won't give [banks] the acceptance that they want. …If you stick to an idea that PFM is a Quicken-like tool or bury [PFM] in a tab online, count the 12 people using it."

Indeed, a broader definition of what software features fit into the PFM category is needed in order to attract a larger audience to what has been a niche service to date, finds new research announced Wednesday by Javelin.

In its latest study, Javelin estimates that 21% of U.S. consumers (or 49.3 million adult users) mix and match PFM software from online banking, desktop software and outside websites like Mint.com, while only 8% of consumers (or 18.9 million U.S. adults) use bank or credit union PFM to date.

The research is primarily based on data from an online sample of 3,000 consumers in August 2012.

What consumers said they want most is a feature some banks, like Citi, already allow: the ability to pull information from all accounts into one place. Indeed, 49% of respondents expressed desire to use such account aggregation capability, according to Javelin's data.

However, consumers also expressed interest in tools that offer deeper insights and guidance into their everyday finances, which most banks have yet to launch.

"Life is changing," Schwanhausser says. "Expectations are changing."

"PFM isn't just about banking transactions alone. How we shop, bank, and plan will be increasingly mobile. …You need to think mobile first," he says.

The firm argues that PFM will appeal to a larger audience of consumers who are seeking help with daily financial tasks and decision-making, including shopping, through the mobile channel.

In the report, Schwanhausser writes:

"PFM will appeal to a mass audience of online and smartphone-toting consumers seeking help with immediate, on-the-go, everyday financial tasks and decision-making. It is only a matter of time before PFM will be virtually ubiquitous, offered not only by FIs but also by billers, mobile carriers, insurers, retailers — anywhere consumers make financial decisions."

To that end, he highlights the rising import of designing digital features that help consumers compare prices, track rewards and view cash-flow projections — all PFM-esque features consumers desire, according to the survey.

Such features could help financial institutions retain customer relationships. Though 56% of consumers said they are most likely to use PFM tools from their primary bank or credit union, that figure dropped when Javelin segmented the respondents into segments. Only about 40% of those aged 25 to 34 and Moneyhawks, a group Javelin identifies as regularly using mobile and online banking as well as paying bills through their banks, expressed the same preference.

"They will go elsewhere for the features," he says. Banks, then, will lose out on data that could help them cross-sell customers or deliver more relevant merchant-funded rewards, for example.

In rolling out such features of the more modern PFM tools, Schwanhausser urges banks to refrain from marketing the tools through a one-size-fits-all lens. Javelin's research highlights MoneyHawks, 25-to-34-year olds, the affluent, Latinos and African-Americans as some of the groups that show greater desire for varied PFM features.

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Comments (2)
I agree, and the preferences and needs do differ for different segments. For affluent clients, one of the needs is to connect the data into their financial plans and give a broader and longer-term context beyond "how much have I spent so far this month". I look for continued innovation and iteration around PFM and the ability to leverage data aggregation beyond basic budgeting tools.
Posted by JP Nicols | Wednesday, February 27 2013 at 10:02PM ET
I agree with the article and have been challenging the development of PFM by banks in this space for years because the real need is to help customers fatten their wallets. Each market segment is different and requires specific solutions for their needs and interests. Transaction convenience is good, building a better cash flow and balance sheet can fatten a wallet.
Do it well and you could get more investment advisory and Trust Dept customers.
Posted by frankarauscher | Wednesday, October 02 2013 at 2:28PM ET
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