For more than a decade, banks have invested heavily in Personal Finance Management (PFM) tools, yet customer adoption has often fallen short of expectations. While budgeting dashboards and spending categorisation promised to help customers better manage their finances, many consumers simply didn’t want another tool requiring ongoing effort. Today, advances in personalisation, AI, and real-time data are reshaping the role of PFM, moving from passive reporting toward proactive financial guidance.
Analysts from Celent said some time ago that only 3.8% of all online banking users are active users of PFM solutions, while Aite Group believed it’s a tad higher at 27% and Javelin concurred with 21% using a mix and match of PFM tools, from traditional money management software or spreadsheets to online banking and third-party services.
Why Personal Finance Management Adoption Remains Low
Let’s save security concerns and the trust issue of using third-party services for another blog post and focus on the PFM solutions provided by banks for now. One of the key reasons cited for the lack of adoption is the absence of a common user experience with traditional online banking capabilities. Relegating PFM to another tab and failing to connect its capabilities to key sections of online banking like transaction details and statements clearly don’t help. So usability and design tricks are called to the rescue to better connect the two. Excellent.
Other reasons include the need for banks to do a better job at marketing the PFM tools, with banners and splash pages on the public web site, proper education of both customers and staff and other multi-channel tactics to raise awareness of the new capabilities. Right on.
All good reasons but do these try to address the root cause?
What Customers Really Want from Digital Banking
PFM tools in most of their current incarnations are basically an online port of traditional money management tools like the venerable Quicken or Microsoft Money. This approach assumes that consumers want and even like to manage their money and allocate a significant amount of their spare time to keep track of their finances in great details. The truth is that generally, beyond money management hobbyists, they don’t.
At Moneythor, we contend that an important way to increase adoption is to cater for the very large budget-averse population, for those who never cared about Quicken or Microsoft Money, for people who want to make sure their finances are on track, their bills paid and their savings in order with no effort, and certainly without a regular deep-dive into the tiniest of their expenses.
“Don’t merely throw pie charts at us and don’t ask us to set detailed budgets before we can get any value from the tool, try first to detect automatically things which are likely to be relevant to us based on our spending patterns and give us actionable recommendations or at least food for thoughts to help us improve our finances” shout the masses.
From PFM to Proactive Financial Guidance
All in all, PFM functionality should simply get out of the way. It needs to truly blend with standard online banking capabilities to deliver automatically the right dose of clever alerts and financial advisory to users. Again, let’s not start the discussion by asking consumers to work but let’s assist proactively and educate softly instead.
The future of personal finance management is not more dashboards, charts, and manual budgeting. It is intelligent, personalised experiences delivered seamlessly within the banking journey. By leveraging transaction data, AI, and real-time personalisation, banks can move from helping customers analyse their finances to actively helping them improve them.