Once a luxury, personal financial management tools are fast becoming a necessity.

Consumers and banks alike are driving the transformation, bankers and vendors say. Consumers — particularly younger ones who may never have touched a check register — are increasingly expecting a more interactive online presentation of their finances. And banks find that PFM provides vital data — a more complete view of a person's financial life — that can help them cross-sell.

In the past banks would get such insights when people went to branches to ask about new products. Today most consumers do their research online, said Alex Sion, the vice president of digital strategy and financial services for Sapient Corp., a provider of marketing technology.

"They just don't come to visit you anymore," Sion said. "You've got financial firms that need to reconnect with customers … but they're no longer seeing them."

With personal financial management tools, customers bring in financial data from other financial institutions and can manipulate their view of that data, such as by looking at their entertainment spending across multiple credit and debit cards.

Sapient hopes to fill these gaps in the data available to its marketing software by working with Geezeo Inc., a PFM provider that is reshaping itself as an online banking provider.

This trend of consumers doing more research online has also driven much of the strategy at Intuit Inc.

Intuit has been particularly bold in its PFM strategy this year, with its November purchase of the free-to-consumer PFM provider Mint Software Inc. and its continued updates to the FinanceWorks PFM service that it offers through financial institutions.

Albert Ko, the senior vice president for consumer solutions at Intuit's Digital Insight online banking unit, said that "even with the Internet, the bank has zero visibility into your financial life outside of what you choose to do with that bank or credit union." But with PFM, "that visibility is dramatically increasing," he said.

According to at least one bank, PFM and online banking are no longer distinct products.

PNC Financial Services Inc. describes its Virtual Wallet, a series of interconnected bank accounts presented in a graphical format online, as what online banking would look like had it been designed today from the ground up.

The accounts that make up Virtual Wallet cannot be opened separately, and they cannot be viewed in a conventional online banking table of accounts.

Mike Ley, a vice president in PNC's payments and e-business group, said people are "used to interfaces like iPhone, iPod, drag-and-drop — and they just expect their bank to be that way: be more visual, be more intuitive. That's why we built it this way."

Consumers in Virtual Wallet's target market of 18-to-34-year-olds don't think of their money in numeric terms, Ley said.

They think of it as "buckets" devoted to certain expenses and savings goals, and they want to money from one bucket to another as needed and to see that movement, he said.

PNC's strategy with Virtual Wallet is to provide it to young customers and then have the account grow up as those customers grow up.

"You start developing good money management skills at a young age, then those carry forward," Ley said.

"We're looking at what we can do to continue to grow with them."

Though most of Virtual Wallet was built in-house, its spend-tracking feature was built on technology from Yodlee Inc., a company that has a similar vision of "drag-and-drop" online banking.

Yodlee was an early champion of a simpler form of PFM, account data aggregation, but has long endeavored to build on that technology to create something more compelling.

As time passed, aggregation fell out of favor. Many banks that offered bare-bones aggregation shut the service down; Wells Fargo & Co., for example, tried Yodlee's aggregation and software that now belongs to Intuit before eventually deciding to offer its version of PFM without aggregation.

Joe Polverari, Yodlee's senior vice president of strategy and development, said that aggregation in and of itself is no longer compelling, but it becomes far more useful as the foundation of a more comprehensive PFM offering.

"The functions people have relative to their finances are relatively unique," Polverari said. "My financial needs are different from yours."

Yodlee has worked over the years to make its offering as customizable as possible.

Half of Yodlee's PFM clients choose to customize its offering rather than stick with a default set of features, he said.

Yodlee is working to put further levels of customization into the hands of end users.

Its FinAppStore system, which it plans to make available next year, would allow consumers to tweak which details they see in their online banking view.

Specific PFM tools would be presented as widgets that can be moved around on the screen to the end user's liking.

"You can get as fancy — or not fancy — as you like," Polverari said.

Many other PFM providers have built their businesses on the same philosophy of offering as much customization as possible.

Jwaala offers banks the source code to build PFM as they see fit, which it says appeals to banks that like to build things in-house.

Geezeo is trying to become a one-stop shop for a bank's online needs, and has already has done custom work for some clients.

For example, even though mobile banking is not part of Geezeo's standard offering, it built a mobile banking system for Stanford Federal Credit Union of Palo Alto, Calif., so that the customer experience for the credit union's PFM users would be consistent across channels.

In contrast to this trend of PFM providers doing business more like conventional online banking vendors, Wesabe Inc., which shares Geezeo's vision of becoming an online banking provider, has pushed against convention in crafting a sales process that allows banks to sign up for PFM much like consumers sign up for Netflix accounts.

Marc Hedlund, Wesabe's co-founder and chief executive, said that "because we started out as a consumer-facing Web site, we really have a consumer Web approach to how we develop things."

Whereas its typical sales cycle has been four months, in November Wesabe launched a Web site that lets bankers sign up for its service in under 48 hours.

Wesabe has also taken a different approach to mobile PFM.

Rather than consider it another channel for accessing data on the go, it is experimenting with using PFM as a communication tool.

Wesabe has long touted its social networking features as a key selling point of its software.

On its free-to-consumer site, Wesabe allows users to discuss their finances online and seek budgeting advice from one another.

Any bank that uses Wesabe's software can tap into this online community. Addison Avenue Federal Credit Union in Palo Alto uses only this feature from Wesabe; it uses Jwaala for the rest of its PFM offering.

But with mobile, Wesabe is looking at smaller communities — in particular, it plans to roll out an update to its app for Apple Inc.'s iPhone that would allow Wesabe users to instantly update family members on their spending.

"If you communicate about money more, it becomes something you have more control over," Hedlund said.

Mobile is also a major focus for Intuit.

Even though FinanceWorks is a natural fit for online banking users, Ko said, it will increasingly become a mobile application through a series of updates planned for 2010.

Many consumers are comfortable using separate online banking Web sites because the experience is fundamentally the same at each one, he said.

This is not the case with mobile, where some banks offer text-only systems, others mobile Web systems, and still others use downloadable apps.

That kind of fragmented experience could deter adoption of mobile PFM by consumers, Ko said. "They really lose the convenience and the consistency and ease of use of managing everything in one place."

PFM is uniquely suited to make sense of the mobile banking landscape, Ko said. Consumers who use a mobile PFM system would be able to tie these disparate experiences together in one interface, he said.

Intuit also plans to better integrate Mint with its other offerings. Next year Intuit will put Mint on its own aggregation system instead of Yodlee's, Ko said. (Yodlee maintains that it is in a multiyear contract with Mint for this service.)

Even though Mint has a mobile application of its own, Intuit's focus with its mobile updates is on FinanceWorks because it feels that PFM has the most potential when offered through a bank.

"This is a superior channel because people … log in to their bank or credit unions' Web site multiple times a week, if not more," Ko said. "They're already there. They're already logged in."

Though larger banks like Wells Fargo and PNC have embraced PFM, most of the activity so far has been from smaller banks, at least in the United States.

Mark Schwanhausser, a research analyst at Javelin Strategy and Research in Pleasanton, Calif., said that many banks are already acknowledging the need for PFM and are pursuing deals or working in-house to get such systems in place.

The cross-selling opportunities are strong, he stressed. If banks get it right, "you'll have financial services acting more like the 'Genius' tab in iTunes," a feature of Apple's music player that suggests new songs or playlists based on the music the software observes a user buying.

Though third parties have been successful in attracting consumers to their PFM Web sites, Schwanhausser agreed that the service is a better fit for banks that approach PFM with an open mind and a spark of creativity. "The bank, to me, has the ultimate advantage — if they don't blow it," he said.