PFM and Banking: What’s Next?

by Edward O'Brien 0

As financial institutions look for ways toreach out and truly engage with their customers, the subject ofPersonal Financial Management (PFM) is often a topic ofconversation. While PFM adoption has been largely underwhelming, itcontinues to show promise for financial institutions.

PFM has evolved from largely a third-party offering to one that isincorporated into numerous online banking applications. In themeantime, the expectations for such applications are changing aswell. Part of the reason for the tepid response for financialinstitution-provided PFM products is their perceived complexity aswell as the lack of visibility of transactions across accounts,account types, and institutions. Often there is some information ondemand deposit account transactions, but little, if any,information on progress toward savings and investments goals.

This is one area where financial institution-provided PFM productscan improve – to incorporate savings goals and progress into corePFM capabilities. Many customers are already trying to catch up orincrease their monthly savings as they’ve emerged from the recentfinancial downturn. Going forward, they will be increasinglymotivated to increase their savings and investment balances evenfurther.

Another area that shows promise for future growth is to incorporatePFM in mobile applications. As more and more customers use mobilebanking for an increasing share of their self-service banking,having PFP capabilities at their fingertips could only help spuradoption. And, as some customers are using mobile banking inconjunction with, or even in place of online banking, it will makesense for financial institutions to offer mobile PFM productsthroughout their customer base. Such capabilities will offerincreased insight into customers’ daily, weekly, and monthlyspending habits, as well as to provide added value by showingprogress toward their strategic goals.

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