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The PFM challenge: how to offer forward-looking insights and contextual support to customers

  • Kirsty CookeBy Kirsty Cooke, 
  • June 21, 2016

At Mapa we have been following the evolution of Personal Finance Management (PFM) tools since 2011 in our PFM Insight Series Reports.

When done well, PFM tools support financial decisions and the financial health of customers. They encourage frequent engagement and communication, and with more customer interactions there are greater opportunities for brands to cross-sell and up-sell relevant products and services – at appropriate points in time. The challenge, is to create a frictionless experience with contextual data, which is insightful enough for customers to regularly consult the application.

PFM is making a comeback

A while back, we wrote that “PFM could be on the cusp of a comeback and a long overdue revival”. We have since then reviewed some great tools in our recently published PFM report.
For example, Swedbank has contextual features such as a “left to spend” figure, as well as an expense comparison feature. It is one of the more advanced PFM tools out of the traditional banks in our research. Yet, it fails to show customers a complete picture of their finances, as it only looks at the user’s Swedbank products.

Swedbank's integrated mobile banking PFM solution

Source: PFM Insight Series – Mobile and Tablet

One of the most advanced aggregators, Tink, allows users to connect accounts from multiple banks to the app. The timeline on their Feed page gives a clear overview of the customer’s financial situation. When the user has spent more money than normal it turns red, and when the user receives a payment it spikes.

Tink's PFM app with contextual features and income/expenditure timeline

Source: PFM Insight Series – Mobile and Tablet

Interestingly, Tink also uses third party data to enable customers to access their credit profile. If there is a suspected ID fraud or card fraud, the customer will be alerted quickly as the credit profile gives an overview of all their associated accounts. This is the type of holistic view that is missing from some of the providers in our research.

We are constantly seeing new PFM tools introduced to the market. However, Mapa’s analysts have found that the solutions offered by traditional banks often lack the support and forward-looking functionality seen within challenger banks and PFM aggregators. There is an increasing number of providers applying financial predictions to their solutions, as well as allowing customers to add future costs and incomes.

What’s in the future for PFM?

At Mapa we believe that PFM tools need to sit at the heart of the mobile banking solution in order to deliver true value to customers. They also need to provide customers with a complete picture of their financial health. Too many PFM solutions only offer a snapshot of the activity within one provider.

Chris Ward, Research Manager at Mapa Research, comments: ”It is our belief that the future of banking will depend on creating open eco-systems to allow all market players to deliver tools that meet consumer needs.”

There is a lot of potential in this area. It would be good to see more integrations between PFM solutions and third party data, and to be able to visualise your own financial situation (across different banking accounts and providers) in the context of wider market insights.

For more in-depth analysis and visual insights into the most exciting PFM tools on the market, the PFM Insight Series – Mobile & Tablet report is available for purchase now.

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