Study: Financial Management Tools Drive Returns, Relationships

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SAN FRANCISCO-A study reveals that online financial-management tools drive deeper relationships, attract younger members, and return about $40 annually in additional revenue per user.

Cathy Graeber, founder of the Swimming Upstream consulting firm, came to that conclusion after studying the habits of consumers using an online financial management tool and the impact the service has on the financial's bottom line. Graeber studied five credit unions and three banks that use Intuit's FinanceWorks, but believes the results apply to any online financial-management program.

Graeber contended that the key finding from her white paper, titled "The Bottom-Line Impact of Offering Online Financial Management," is that an online financial management tool brings an additional $40 in revenue per user, compared with those members using only online banking. "When we looked at the attrition rates and product ownership and did the calculation, we found there was a $40 variance in net product profit between members that use FinanceWorks compared with online users that do not use FinanceWorks."

With credit unions' limited budgets, that's an important number to know, suggested Graeber. "With all of the online tools to consider adding, like bill pay and mobile, you really want to know the bottom-line benefit before adding a solution."

CUs in the study ranged from $1.2 billion to $4 billion in assets, banks from $1.6 billion to $4.3 billion. The case study often refers to data from a $1.2-billion CU, but Graeber said findings at the credit union were consistent across the seven other financials in the study. Intuit commissioned Graeber to perform the analysis.

Other Important Findings:

• Users log into FinanceWorks twice as often as users just using online banking (18 times per month versus nine).

• Financial-management tool users present a 98% retention rate, 53% higher than offline members, and 4% higher than online members not using FinanceWorks.

• FinanceWorks drove deeper relationships. The average FinanceWorks user owns 3.7 accounts, offline members 3.1, and online members not using FinanceWorks own 3.4.

• FinanceWorks users have nearly 30% higher loan balances than those not using FinanceWorks.

"The main thing we saw is that the use of an online financial-management tool made much more active members," Graeber said. "That's important because every opportunity to get members into your website is a chance to cross-sell. And it gives them the ability to serve themselves, which lowers your costs to serve."

Graeber also pointed out that Gens X and Y consistently, across all eight financials in the study, made up at least half the users of the financial-management program, and in some cases comprised two-thirds of users.

Not only does the study show the advantages of a financial management tool to generate business, it also can be a sound defensive strategy, concluded Graeber. "Besides some of your competitors offering the service, you face third-party sites like Mint and Wesabe who say, 'Don't worry about the bank or credit union and come to us.'"

For info: The white paper can be downloaded at

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