Transcript Personal Financial Management Tools

Personal Financial Management
Summary
Prepared for: NBCUniversal
December 20, 2013
Table of Contents
Executive Summary - Recommendations……………..………………….....3
Industry Overview……………………………………………………………………5
Competitive Assessments………………………………………………………..11
State of the Industry……………………………………………………………….17
Utilization……………………………………………………………………………..23
Consumer Insights………………………………………………………………….28
Marketing/Advertising…………………………………………………………….35
Emerging Technologies…………………………………………………………...37
2
Executive Summary:
Recommendations
3
Based on synthesis and analysis of the market, ORC
recommends the approach to developing a PFM offering:
•
Identify an unmet need that is not being delivered via current tools, as the space is extremely crowded. In
particular, select a target demographic, identify the tools most important to them, and build a solution that
lets them access it via any channel and device, rather than trying to be a one-size-fits-all solution.
•
Understand that key features available today (premium content, number of institutions accounts available to
aggregate, mobile applications) are quickly becoming commoditized and required elements of serious PFM
products.
•
Segmentation may be the key to success: Being all things to all people may not provide enough
differentiation to stand out in the crowd.
•
Incorporating social media and networks will be key to success, particularly as you engage the younger
generation, which has literally grown up with a social mindset.
•
Security will remain important, as those that seek to do harm are relentless, particularly with respect to
financial information.
•
Simplicity and convenience can’t be overlooked, as early adopters who are comfortable with technology are
already using PFMs. Mass market growth will be achieved by reaching out to less-technologically or
financially savvy customers.
•
Communication and awareness is key to gaining share. Very little traditional media spending was found
focusing solely on PFM products, which is one possible reason for the low rate of consumer adoption.
4
Industry Overview
5
Personal Financial Management (PFM)
Personal financial management (PFM) encompasses an array of online money management,
tracking, information, and planning tools and represents the next evolutionary step beyond
online banking and bill payment. PFM involves a more in-depth relational approach to online
account access. Many parties - including depository institutions, investment providers,
financial planners, and third party providers – have introduced online services that come under
the umbrella of PFM. Product offerings, however, tend to be inconsistent and are evolving ranging from Web pages with financial "self-help" articles to more complex dedicated sites
that include account tracking, tools to chart and budget spending, and financial planning
tools. At their most advanced, some PFM sites import data from multiple providers and
include analytical capabilities providing a total view of a consumer's financial position. These
tools, along with online banking and bill payment, can add "stickiness" to a relationship.
As PFM continues to evolve, many financial institutions see it as key to their future customer
relationship strategies (acquiring, broadening, and enhancing relationships) and are moving to
implement or improve their offerings. It is essential that the customer perspective be
understood in terms of the degree of information and functionality desired in PFM sites.
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Personal Financial Management Tools
PFM tools are designed to give consumers a greater
level of control and comprehension over their financial
lives. The tools generally include one or more of the
following features:

An aggregated dashboard view of all their
accounts, from investments to financial, to
payment, to insurance, and more

Specialized information or news related to personal
financial topics

“What-if” scenario planners or calculators

Categorization and visualization of spending habits
and trends

Access to financial advice or recommendations

A convenient platform to access data, via the Web
or mobile devices

Cash-flow modeling or forecasting, based on
financial data
7
Personal financial management tools were once primarily
found in accounting software packages, but have evolved
to Web-based platforms with mobile-access applications
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
Consumers looking to track expenditures or manage
multiple accounts had to use software such as
Peachtree Accounting or Quicken to aggregate
accounts

This software was relatively expensive, required a
significant amount of manual data entry, and often
required some knowledge of accounting concepts

Until the proliferation of broadband Internet access in
the late 1990s and early 2000s, most consumers
looking to aggregate accounts had to do it manually.

Today’s applications, which save data in the cloud or
on private company servers, can pull data from a
variety of sources (sometimes in real time), and allow
users to have a holistic view of their financial
landscape.
Today’s PFM Tools Are Highly Variable, In Terms of Focus
and Functionality
9

The most basic tools are usually found on financial websites, which provide
personal finance-related content, along with an occasional stock tracker or
mortgage calculator thrown in to create a more personalized feel. However,
with the exception of stock tickers, no personal data is pulled or saved on the
site.

PFM tools offered by credit-issuing institutions are more robust, offering the
ability to automatically track spending, and, in some cases, manipulate how
finance charges are applied, providing more control over one’s account than
previously available via phone account management.

Banks, credit unions and other primary FIs tend to offer the among the most
robust PFM offerings, which include full account integration across a variety of
account types, as well as providing real personal financial planning tools. Some
also include fully integrated investment monitoring and tracking tools.

Investment-driven PFM tools put the focus on long-term personal financial
management solutions, providing full investment account aggregation via a
dashboard. Many also provide investment recommendations or advice, either
via a commission-based or flat-fee model.

Independent providers of PFM tools generally offer full account aggregation,
and many providers are actively seeking to provide advanced financial
modeling tools, to better assist customers in planning for their short- and longterm goals.
…but they haven’t yet gained traction…

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
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The key issues with PFMs revolve around customer usability,
privacy, security and consent of data usage, and, particularly
with investment-related PFMs, transparency of
recommendations.
Another major issue is the issue of providing real value: if the
PFM doesn’t provide tangible benefits beyond basic
organization, casual users are unlikely to adopt it, especially if
they are not “organization-focused” people.
Today’s consumers also prefer to have fully integrated
applications that exist on the Web, and on mobile applications,
especially considering that tablet and smartphone usage has
been on the rise.
Nevertheless, security remains a major issue: consumers are
worried about having all their info available in one place,
particularly on a mobile device, which could easily be lost or
stolen.
The PFM tools that have seen adoption by consumers are made
extremely simple to use, feature seamless account aggregation,
feature robust security, and have transparent policies and
procedures relating to how their personal spending and saving
data is used or offered to partners.
Mapa Research says the following
elements are required for successful
adoption of PFM tools by consumers.
Basic Visualizations (Entice): Real-time
feedback in relation to day-to-day finances
including visualization of balances,
transactions, etc.
Analysis (Educate): How does customer
spend/save relative to peers, categories,
merchant, geolocation and holistic view of
finances.
Engagement Tools (Activate): Engaging tools
to help customer improve financial situation
through intelligent budgeting, goal
development, forward-looking assessments.
Competitive Assessments
There are literally thousands of PFM implementations in the market, from independent
solutions to white-label versions of popular platforms. The tables on the next four slides
provide a representative selection of PFM sites and tools by category which have been
assessed according to platform, business model, key features, and a SWOT analysis.
* Please reference the accompanying “PFM Competitor Profile” document for full profiles
of each of the following PFMs.
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Key Assessments from Current PFM Offerings

Generally speaking, the institution-driven PFM offerings focused on providing a holistic financial picture for
users, and incorporated tools (such as expense tracking, savings calculators, and budget planning) designed
to increase the stickiness of the institution. While not on the bleeding edge of functionality, most of these
PFMs incorporated a solid range of tools.

Credit-driven PFM tools were more limited in terms of being able to present an overall financial picture,
though they do seem to be more innovative, in terms of offering spending-related tools.

Investment-driven PFM tools are big on providing data and account aggregation, and some are even
branching out into providing financial management and advice. However, these PFM tools do not make
day-to-day financial management a priority.

Independent providers of PFM tools could be considered the most broad-based of the space, providing a
mix of cutting-edge tools that run the gamut, from day-to-day spending and modeling tools, to investmentfocused PFM features.

Conversely, media properties offer very little personalized or account-based PFM tools, beyond stocktracking modules and basic, non-account driven calculators. Their perceived value is in the premium content
found on the site, as provided by their parent editorial staff or partners.
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Current PFM Offerings at a Glance
The chart below highlights 20 PMFs across a variety of segments, based on a subjective
assessment of each PMF’s feature set and ease of use for typical consumers.
Ease of Use
Easier
** Most media sites feature very little account
aggregation technology, while full account aggregators
such as banks and independent PFM providers often
do not have premium editorial content.
Harder
Bare-Bones (mostly financial
news, a few calculators,
perhaps stock tracking)
Middle of the Road
(Account aggregation,
some planning tools)
Feature Set
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Feature-Rich
(account dashboards,
cashflow modeling,
investment advice)
Institution-Driven and Credit-Driven PFMs
Category
Key Features
Strengths
Bank of America
MyPortfolio
Web
Customer
value/stickiness
External account
aggregation,
spending profiles
Large potential
customer base,
proven platform
(Yodlee)
Does not appear to
incorporate
individual stocks or
funds
Wells Fargo
MyMoneyMap
Web
Customer
value/stickiness
External account
aggregation,
spending profiles,
budget forecasting
Large potential
customer base,
innovative feature
set
Adoption of tool is Consumers tend to
low, given the
trust banks PFM
length of time it has more than
had a PFM
unaffiliated ones
Some providers
may provide similar
functionality via
mobile apps
Geezeo
Web and Mobile API
White-label
provider of PFM
platform
Account
aggregation,
expense and
budgeting tools,
embeddable API
Large roster of FI
customers
Not as strong with Credit unions need
large FIs
to incorporate
advanced PFM
tools, and don't
have the resources
Some well-known
independent
players (such as
Mint) may target
this segment
State Farm Pocket
Agent
Mobile devices (iOS
and Android)
Customer
value/stickiness
External account
aggregation,
spending profiles,
integration with
insurance accounts
Can incorporate
investment
accounts in the
mobile app
Many consumers
may not use State
Farm as a primary
account
Mobile-centric
applications may be
more popular
among current and
future PFM users
Other flashier and
more full-featured
PFMs could steal
away users
Chase Blueprint
Web
Customer
value/stickiness
Credit account
Large potential user Does not aggregate
aggregation, ability base, innovative
other types of
to adjust payment feature
accounts
interest application
on purchases
Ability to calculate
payment schedules
dovetails with PFM
trend of
incorporating
forecasting tools
Users generally
gravitate toward
simpler PFM tools,
rather than ones
that are tied to
product features
Discover
Web
Customer
value/stickiness
Account
aggregation,
expense and
budgeting tools
Consumers are
actively seeking
paydown or
planning tools
Lack of advanced
features will limit
appeal, given the
vast number of
better-equipped
tools on the market
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Primary Platform
Business Model
Weaknesses
Paydown Planner Inability to
and Spend Analyzer aggregate data
work well to
from other
provide a clear
institutions limits
picture of current appeal
financial scenario
Opportunities
Threats
Consumers tend to More robust tools
trust banks PFM
are available from
more than
other providers
unaffiliated ones
Investment-Driven PFMs
Category
Primary Platform
Business Model
Key Features
Strengths
Weaknesses
Opportunities
Threats
Consumers are
looking for more
robust investmentmanagement tools
that are available
via Web and mobile
Commission-based
financial advice has
largely been decried
as not in the
customers' best
interest
SigFig
Web and Mobile
Lead generation
Investment account Strong financial
aggregation,
data tracking and
personalized
analysis
financial advice and
recommendations
Some may find
commission-based
business model a
conflict of interest
Yahoo! Finance
Web
Advertising
Financial news and Yahoo! Brand
guides, large
name, high site
assortment of tools traffic
and calculators
Limited true PFM Some consumers
functionality
may be wary of
(cannot import
providing personal
other financial data) financial data, and
prefer anonymous
tools and
calculators
Full-featured PFMs
could integrate
more third-party
financial news as
part of their
offerings
MSN Money
Web
Advertising
Stock tracker, lots Strong brand equity Limited true PFM Some consumers
of financial market via CNBC content functionality
may be wary of
news and insights,
(cannot import
providing personal
basic calculators
other financial data) financial data, and
prefer anonymous
tools and
calculators
Full-featured PFMs
could integrate
more third-party
financial news as
part of their
offerings
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Independent PFMs
Category
Primary Platform
Business Model
PersonalCapital.com
Web / Mobile
Fee Based on Assets
Under Management
Mint
iPhone/iPad
Lead generation
Yodlee/ Yodlee Money Web / Mobile API
Center
Key Features
Free investment
analysis, account
aggregation,
managed advisory
service
Auto categorization,
budgeting, alerts,
spending graphs, goal
planning and setting,
investment tracking,
bill payment
reminders, universal
account viewer
White-label provider Account aggregation,
of PFM platform, fee- advanced API,
based
growing incubator
network
Strengths
Weaknesses
Opportunities
Growing number of
people want to see
their portfolio in
detail, but get advice
from professionals
Private investment
advisors could offer a
similar tool to their
clients
Very strong brand
recognition, cuttingedge tools,
diversifying revenue
streams
Credit unions and
banks are looking to
leverage any name
recognition, and
partnering with Mint
could provide that
edge
Some banks offer
similar or more
powerful tools, which
some consumers
implicitly trust more
than independent
PFM providers
More finance-related
companies are
beginning to offer
PFM-based tools, and
need platforms
Competition from
banks, other whitelabel providers, and
independent
aggregators
Mint is the "leader,"
and therefore
everyone is gunning
for them
Sells to Fis,
The overall market for
eliminating direct
bank-based PFMs is
competition with Mint finite
and others, also offers
a free version (Money
Center) to build brand
recognition
Manilla
Web / Mobile
Customer
Partnership with AOL, Strong account and Focus on bill payment Online bill payment
value/stickiness, paid account aggregation user growth, ability to could alienate stock- on the rise
fees by billers
tools
pull in accounts
focused customers
beyond financial
services
Hello Wallet
Web / Mobile
Fee Based ($100
Strong focus on
membership, usually financial literacy and
sold to employee
responsibility, strong
benefits departments) aggregation tools
MoneyDesktop (offers
to Fis)
Web / Mobile
White-label provider Account aggregation, Sells to Fis, partners
of PFM platform, fee- BubbleBudgets
with payment
based
planning tool
networks, innovative
budget tool
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Threats
Strong leadership,
Investment floor for
transparent business advisory services
model, robust tools could limit market
potential
Sold to benefits
Upfront cost could
departments, in
turn off potential
addition to direct
users
sales to consumers,
model incorporates a
philanthropic element
Some billers or banks
already aggregate
bills
Workplaces are
Other providers could
looking for additional adopt this model fairly
benefit tools designed easily
to help their
employees stay
financially healthy
Strong growth in
Credit unions, a key
clients and utilization target, are looking for
may not be
innovative PFM tools
sustainable
Other white-label
providers are
developing budgeting
tools
Media Properties
Category
Primary Platform
Business Model
Key Features
CNN Money
Web
Advertising
Personal finance
Strong brand, stock Minimal set of PFM Consumers are
content, some PFM tracking tool
tools
clamoring for
tools
personal finance
knowledge
Other full-featured
PFM tools may
incorporate
premium content
WSJ MarketWatch
Web
Advertising
Personal finance
WSJ name, strong
content, some PFM content, stock
tools
tracking
Minimal set of PFM Consumers are
tools
clamoring for
personal finance
knowledge
Other full-featured
PFM tools may
incorporate
premium content
FoxBusiness
Web
Advertising
Personal finance
Strong content,
content, some PFM stock tracking
tools
Minimal set of PFM Consumers are
tools
clamoring for
personal finance
knowledge
Other full-featured
PFM tools may
incorporate
premium content
Daily Finance
Web
Advertising, lead
generation
Personal finance
More robust
content, some PFM personal finance
tools, leadplanners and
generation focused- calculators, stock
section
tracker
PFM calculators are Consumers are
not able to import clamoring for
or save user data
personal finance
knowledge
Other full-featured
PFM tools may
incorporate
premium content
Kiplinger Personal
Finance
Web
Advertising
Personal finance
Very focused
PFM calculators are
content, some PFM content, lots of
not able to import
tools
financial guides and or save user data
calculators
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Strengths
Weaknesses
Opportunities
Consumers are
clamoring for
personal finance
knowledge
Threats
Other full-featured
PFM tools may
incorporate
premium content
State of the Industry
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History of PFM Tools
Personal financial management tools were originally designed to provide more detailed monitoring of a specific
single account within a financial institution, but have evolved over the past several years. Wells Fargo was among
the early bank entrants into the space, putting financial statements online in 1995. Other banks soon followed,
but many of the tools were limited to managing money within a single institution
Since the early days of PFM industry, the major innovations and transitions have included:
•
•
•
•
•
•
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A switch from being offered solely by large banks and FIs, to a diverse range of companies, including credit
card issuers, media sites, billers, retailers, and investment-focused firms
An evolution of simple account status screens to fully equipped dashboards capable of pulling financial data
from thousands of FIs
Some providers have abandoned the direct-to-consumer model, such as Yodlee, and have focused on whitelabeling their PFM platforms to financial institutions
An increase in the use of mobile applications, for smartphones and tablets
A few distinct business models have emerged:
• Lead generation: companies pay a specific fee for each customer delivered via offers, based on data
collected through the PFM, regarding spending preferences and trends
• Advertising: PFM hosts receive a fee for each clickthrough to a sponsor’s ad or service
• Transactional: PFM providers recommend specific tools or strategies (usually related to investments)
and are paid a commission or fee
• Fee-based: A PFM charges a fee equal to a percentage of assets under management, similar to a
financial adviser’s fee
• Stickiness: A PFM is not set up specifically to generate discrete revenue; however it is used to increase
the stickiness of the Web site, which can result in additional utilization, reduced churn or turnover, or
additional cross-selling opportunities.
Despite the advances in the depth and breadth of PFM offerings, US adoptions remains low, with only 1 in 5
Americans currently utilizing these tools.
People are increasingly concerned about managing
their financial future…
According to the BlackRock U.S. Investor Pulse Survey 2013,
U.S. investors noted five key themes :
1.
2.
3.
4.
5.
Concerned and lacking confidence in their financial
futures
Reluctant to invest as people hold on to cash
Knowledge gap around income-generating
opportunities
Squeeze on household incomes
Widespread fears about meeting retirement goals
In a separate Impacts study conducted in 2012, both
younger and older Americans were equally concerned about
their financial future.
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Many people are concerned about a lack of budgeting
skills or financial discipline.
The National Foundation for Credit Counseling (NFCC) and the Network
Branded Prepaid Card Association (NBPCA) 2012 Financial Literacy Survey
“revealed a disturbing lack of basic financial skills that are critical to building
a stable financial future.”
•
•
•
•
•
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More than half of U.S. adults, 56 percent, admit that they do not have a
budget;
One-third of U.S. adults, or more than 77 million Americans , do not pay
all of their bills on time;
Thirty-nine percent of adults carry credit card debt over from month-tomonth;
Two in five adults indicated that they are now saving less than they were
one year ago, and 39 percent do not have any non-retirement savings;
and,
Twenty-five percent of those who do not currently have non-retirement
savings indicated that, if they did begin to save, they would keep their
savings at home in cash.
Clearly, consumers are asking for tools to help them
manage their financial lives…
According to a 2013 report from PwC entitled Experience Radar 2013: Lessons
from the U.S. Retail Banking Industry:
“3 out of 5 (customers) want the option of researching products on their
own rather than asking bank employees. Customers are asking for more
digital options.”
According to 2013 research from Personetics, “When it comes to ‘managing’ their finances, consumers want
quick and easy solutions to their immediate needs. They want control. They want assistance with their day-today finances.”
A national survey of more than 600 U.S. adults conducted for Varolii Corp. in 2013 revealed a surprising
disparity in what consumers want in a mobile banking app versus what they actually get from their banking
provider.
• Americans increasingly want… nay, expect to be able to deposit checks and receive real-time notifications
on account activity from their mobile banking apps.
• According to the research, most retail financial institutions are failing to deliver on consumer expectations
with first- or even second-generation mobile banking apps.
• 64% of smartphone users in the US believe it is their bank’s responsibility to inform them if they do not
have sufficient funds to pay a bill, and among respondents under the age of 24, this share rises to 73%.
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Millennials, in particular, are seeking guidance…
Several surveys and news stories published in 2013 focused on Millennials found that this group, perhaps
more than others, is actively seeking help with their financial lives. They have been:
• Raised on the Internet and disheartened by having watched the older generations suffer through the tech bubble of
2000 and the recession of 2008
• They see money as a path to career freedom, where they can pick up and start again at will as soon as a more
interesting offer comes along.
• Increasingly they turn to Web-based wealth management firms or choose do-it-yourself brokerage accounts
“Three in four 25-to-34 year olds (a group that includes older Millennials and
younger Gen X members) look first to their peers for money guidance,
according to a survey from the American Institute of CPAs and the Ad Council.”
“Millennials, those born roughly between 1977 and the early 2000s, aren't like previous
generations because they don't deal with physical money as often, they swipe cards
and put them back in their wallet. So the concept of how much money they have to
spend is hard for them to gauge”, said Jack Fuentes, CEO of Level.
According to a Wells Fargo survey, “Despite the Millennials’ confidence and
self-reliance on their future, they most often turn to family for advice about
money. When specifically investing, 36% of Millennials turn to their parents or
other family members as their first source for guidance, followed by a paid
professional investment advisor (17%) and online sites (15%).”
According to a new survey from the American Institute of CPAs and the Ad Council,
“three quarters of young adults, or 78 percent, use their friends’ financial habits to
determine their own. The vast majority, 66 percent, wants to keep pace with their
peers on where they live; 64 percent say the same thing about what they wear. Nearly
two-thirds experience pressure to keep up with the types of places they eat and the
gadgets they carry.”
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Utilization
24
Low Adoption of PFM
Despite the promises of easier account monitoring via dashboards, as well as specific advice and
planning tools, adoption of PFMs has remained low, according to a variety of independent sources.
According to Credit Union Times, about one in five of U.S.
consumers use PFM, though that percentage has been
projected to increase to about 30% by 2014.
According to 2013 research from The Financial Brand:
•
•
•
34% of current bank shoppers use PFM tools
11% take advantage of PFM tools provided on their
primary institution’s online banking website
23% use websites like Mint.com.
Older Americans, in particular, have shied away from PFM
usage.
•
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Only 16 percent of boomers use these types of tools
(compared with 44 percent of Gen Yers), according to a
2012 survey of 1,115 consumers by Aite Group, a financial
services research and advisory firm.”
So what do people really want in a PFM?
A 2013 Javelin Research
representative survey of 3,000
U.S. consumers found that the
ability for a customer to view all of
their accounts was the most
important feature in a PFM.
Javelin grouped the features into
four tiers, based on the likelihood
of using the feature, expressed as
a percentage.
August 2012
N=3,000, all consumers, Javelin
Strategy & Research
26
TIER 1: 49%
View all account balances
TIER 2: 34%-38%
Earn points or enter sweepstakes |
Rewards reminders | Personal finance
alerts | Comparison pricing | View finances
on a calendar | Price-change alerts
TIER 3: 29%-31%
Record cash purchases | Card-reward
recommendations | GPS-based merchant
discounts | Cash-flow estimator | Financial
planning tools | Automatic budget
categorization
TIER 4: 16%-23%
Motivational alerts| Investment tools | Archive
business expenses | Social network shopping
recommendations
Notable highlights of successful PFMs
• Ease of Use: People gravitated to bank-run PFMs because their primary bank account—usually
a checking or savings account – was likely already set up to handle online banking, and an
integrated PFM tool doesn’t require the user to set up a new account. By inputting account and
routing numbers, it’s easy to pull other accounts into an existing account structure.
• Stickiness is Key: According to MasterCard, “Consumers, more likely to switch banks as a
result of dissatisfaction with customer service or increased banking fees, are intensifying their
search for the best rates, products and services. Globally, those with just one banking
relationship have fallen from 41 percent to 31 percent since 2011, and those with three or more
banks have increased from 21 percent to 32 percent in the same period. When shopping for a
bank, consumers are looking for easily navigable online banking portals, the best interest
rates, multiple account features and availability of promotions or offers.”
• Forecasting Could be the Segment’s “Killer App”: The broad idea of these tools is to provide
visual estimates of account balances for a certain period of time ahead based on the user's
calendar data like upcoming bills. Consumers would be able to use the tools to calculate
whether or not they can afford to make long or short term purchases based on cash flow.
Banks such as Wells Fargo, independent PFM providers like Planwise and white-label PFM
providers such as Banno are all working on this technology, which needs to pass a number of
compliance tests and must be tested to ensure accuracy and data integrity.
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Notable highlights of successful PFMs continued…
• Real-Time Data: The ability to provide users with a real-time view of their financial position
through a mobile app could help spur more responsible purchasing by consumers. It would
also add a significant amount of value to PFM tools that have lacked a truly unique reason to
be used.
• Banks Still May be Best Suited to Winning PFM Space: Despite the significant technological
achievements of independent or third-party PFM tools, Javelin Strategy & Research senior
analyst Mark Schwanhausser says banks and credit unions are in the best position to win the
PFM space because they hold the financial information of their customers, which is a numberone reason people use PFM tools: account monitoring.
• Impact of PFM Tools: The impact of PFM tools is largely dependent upon how consumers
utilize them, though a 2010 survey by Aite suggests that personal finance tools “actually
change people's behavior, too. In a survey of people who use such tools, 3 in 4 said they now
have better control of their finances. Two in 5 said they are saving more money, and 1 in 5 said
they are paying less in late fees.
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Consumer Insights
29
Who Is Using PFM Tools?
Only 1 in 5 Americans today use PFM tools, and they prefer to mix and match between
various providers and platforms.
Javelin Research from 2012 estimates that 49 million
Americans use PFMs today. The most popular tools are
provided by:
•
•
•
•
•
•
•
Primary financial institutions (56%)
Credit card networks (17%)
Merchants (10%)
Online or mobile payment providers (7%)
Mobile Carriers (5%)
Independent Mobile App Developers (3%)
Billers (3%)
However, many people who are highly focused on their
financial situation, as well as and Gen Y.2 Consumers Are Likely
to Use PFM Tools From Non-FIs, due to their desire to find the
absolute best technological and functional fit for their needs.
30
Nonetheless, PFM usage rises when consumers already
use bank-based online account management tools…
A June 2013 study by Celent found that bank
websites prevailed as the top method for
managing personal finances, particularly among
those who own smartphones.
Javelin Research conducted in 2013 found that
the majority of consumers that used online
banking, mobile banking, and bill payment
services through their primary financial
institution also used PFM software.
The percentage of people using PFM tools rose as
investible assets rose to 69% at the $1M level,
after which utilization falls back by 4%, according
to Javelin Research.
February 2013
Usage is defined as using any type of PFM tool within the past 90 days.
Strategy & Research
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42% of US smartphone owners
reported relying primarily on their
bank’s website to manage their
finances vs. 27% of non-smartphone
owners.
71%-75% of online banking, mobile
banking, and bill payment services used
PFM software, bank PFM products, or
Web-based PFM offerings.
58%-69% of people with investable
assets of less than $300,000 to more
than $1 million used PFM software,
bank PFM products, or Web-based PFM
offerings.
Need to go mobile…
Several published studies have produced findings that indicate that people are increasingly using their
smartphones and tablets for mobile banking, payments, and other financial-related activity. Indeed, The Credit
Union National Association (CUNA) released a survey that finds that among smartphone users, more than 50%
use their phone to make some type of mobile payment, despite security remaining a major concern.
Meanwhile, the Interactive Advertising Bureau (IAB) in April 2013 released “Mobile and Money,” a new study
conducted in partnership with InMobi and Viggle, that looks at how mobile users are leveraging smartphones
and tablets to manage their personal finances. Key findings include:
58% regularly use their bank’s mobile app,
while another 25% are aware of the app, but
have yet to use it
19% of people pay friends or family via their
smartphone
50% use their bank’s mobile-optimized web
site, while another 26% are aware of the
feature, but have yet to test it
42% pay mobile phone or other bills via their
smartphone
45% use their mobile phone to purchase
digital music, movies or smartphone apps
37% buy tickets for a movie, concert, travel
or other event
34% pay a business for real-world
goods/services with their smartphone
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Usage of mobile devices to access financial data is
projected to explode
Mobile usage projected to
triple in less than 5 years
A 2012 report published by Aite, states that consumers using
a mobile device to access their bank account will increase
from 33MM to 96MM by 2016. Forrester Research sees that
number reaching 108 million by 2017.
50% of tablet owners have
used it for banking
According to Blackstone Technology Group’s Financial
Services team, nearly 50 percent of tablet owners have
performed some level of banking on their tablets, with close
to 40 percent of tablet owners having engaged in mobile
banking on a consistent monthly basis.”
Mobile financial services
usage is prevalent among
the underbanked
Monitoring accounts and
transactions, and transfers are
the most common uses of mobile
banking applications
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Use of mobile financial services is particularly prevalent
among the 10 percent of the population that is underbanked
(people with bank accounts but who use check cashers,
payday lenders, or payroll cards).
According to The Federal Reserve Board’s Survey of
Consumers' Use of Mobile Financial Services, “The most
common mobile banking activities continue to be reviewing
account balances, monitoring recent transactions, or
transferring money between accounts.”
Despite the proliferation of PFM tools, consumers are
still looking for a personal interaction
Three separate sources noted that consumers are still interested in having their financial institutions assume
responsibility for personal contact and management of some of their financial issues.
According to Core Techmonitor, “The basic PFM functionality provided by
banks is increasingly unable to satisfy the demands of customers. In
addition to a display of their financial data, many customers desire an
interpretation of their personal financial situation, whether it’s a
comparison with their peer group or financial advice. They expect
information on and support in making financial decisions, either through
the community or a financial advisor. Equally, they believe their bank should
proactively support them in managing their personal finances.”
According to MorningstarAdvisor, “Although PFM tools are helpful for
tracking spending and budgeting, consumers may realize that they might
benefit from a personal relationship with a professional financial advisor for
more complicated needs. Many advisors use portfolio management
software solutions to deliver account information and performance reports
to clients, often through the use of an online client portal, but these tools
lack the aggregation of client banking and credit accounts present in PFM
apps, and many of the interfaces are not designed with mobile phone
access in mind. Also, clients who continue to use PFM apps will receive
automated product suggestions that may conflict with the financial
objectives outlined by their advisors.”
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Understanding PFM Website Usability and Engagement

Research from Change Sciences suggests that banks may have an
advantage over startups and software companies (e.g. Mint) when it
comes to providing online personal financial management tools. The
study showed that the money management offerings of two banks,
PNC and Chase, are more trusted by consumers by a wide margin
compared to startup and software counterparts. Consumers also
report that they are more likely to become users of the money
management services of the two banks compared to other services,
after interacting with the marketing web sites of the services. The
logic is that Bank-oriented PFMs are more likely to gain traction with
its customers because they are often the primary institution and a
highly trusted source. Banks have a significant incentive to get
customers to use its PFMs, because the more engaged a consumer is
with a bank, the more likely the are to remain a customer.

The study showed that personal finance sites scored moderately well
for usability but fared poorly for engagement as a group compared to
other sites in the Experience Cloud. The top two stumbling blocks for
personal finance web site users were that there was not enough
information and people felt they were required to do too much
reading. While these two points may seem contradictory, our
qualitative analysis of individual user sessions suggests that it is less
about the quantity of reading rather than the quality. This graphic
below underscores the finding that there is a higher level of
engagement with bank PFMs, despite the fact that independent PFM
providers are quite user friendly.
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Marketing/Advertising
36
Advertising Trends and Strategies Used by PFM Providers
37
•
Based on a scan of advertisements on Competitrack, very few ads across measured media sources
specifically highlighted the PFM tools. However, large banks have promoted their online banking
software and PFM tools to a greater degree than independent providers, simply due to their scale
and ability to cross-promote other services and support the overall brand, such as Chase’s Blueprint
service.
•
According to industry segment analysts, much of the marketing and promotion of PFM tools should
be conducted via proactive marketing of the service through direct and digital channels.
•
Furthermore, targeting specific groups by offering segmented, customized tools based on usage
profiles and needs, rather than a one-size-fits-all approach, is being used by many of the providers,
via social media, and by offering promotions on other sites where financial management tools
might be appreciated, such as the wedding- planning site theknot.com.
•
Financial news sites tend to promote their tools and services via content-sharing deals, banner ads,
and other electronic promotional tools, rather than via traditional measured media, which is very
expensive and doesn’t necessarily provide the necessary ROI required.
•
Independent PFM providers did not appear to advertise through measured media channels, instead
opting to use affiliate marketing strategies .
•
The use of a social media presence (Facebook, LinkedIn, Google+, etc.) was nearly ubiquitous with
all types of PFM providers, given the ease of setting up a presence and positive ROI, in terms of
generating awareness.
Emerging Technologies
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Emerging Technologies and Tools
Personal financial management tools have migrated from desktop-based, private software applications, to Webbased tools hosted in the cloud. However, additional technologies are being used in PFM offerings of today and
tomorrow.
• Several new products, either now on the market or due to
launch soon, contain software that encourages users to
take action, giving them the value proposition to
encourage wider adoption. Merchant deals, debt analysis
and savings games are all part of new strategies to give
users a more compelling reason to use PFMs.
• Another innovation that is already being heavily promoted
is person-to-person payments. American Express Co.,
MasterCard Inc., Visa Inc. and PayPal all offer ways for their
customers to send and receive money using links to various
accounts and cards, thereby creating another potential
account from which a PFM needs to pull or monitor data.
• New speech-enabled uses and applications for the banking
industry are coming to market, and the ability for mobile
PFM software to utilize this voice-recognition technology
will be key to staying on the cutting edge.
• One of the most intriguing PFM features developers are
working on would provide consumers with real-time
financial information on their mobile or tablet that would
help them with financial decisions at anytime, anywhere.
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• Seven out of 10 wealthy investors either have changed their
relationship with an investment provider or reallocated
actual investments because of something they read on
social media, a 2013 Cogent Research LLC survey released
today shows. About 34% of affluent investors specifically
use social media such as Facebook, LinkedIn, Twitter and
company blogs for personal finance and actual investing,
according to the survey, which assessed 4,000 investors
with more than $100,000 in investible assets…These
Investors also are researching advisers increasingly on
social-media sites such as LinkedIn and they are being
motivated by things they discover or hear about through
social media to contact their advisers, thereby making some
sort of social media presence a necessity for PFM offerings.
• According to MobilePaymentsToday, “Account aggregation
and personal financial management service Mint has
launched a version of its app for Windows Phone 8-based
smartphones and for Windows 8.1-based touchscreen
desktop PCs and tablets… Mint's app, which is already
available for iOS- and Android-based devices, provides live,
up-to-date information about users' various accounts as
well as bill reminders and budgeting tools.”
Tools that make personal budgeting simpler are also in
development.
• Mobile-first financial services company Level’s first
product is an iPhone app that aims to take the hassle out
of budgeting for young people,
• The Level Money app, now available in the Apple Store,
automatically analyzes users' finances to calculate
income, recurring expenses and recommended savings
each month. It then calculates how much money users
have to spend on a daily, weekly, and monthly basis.
• Every time users make a purchase, the app gauges how
much cash they have left to spend that day. The app is
targeted at Millennials.
• OnBudget’s app is designed to build customer retention
of daily expense prepaid cards by incorporating personal
financial management tools that digitize the "envelope
budgeting system" popular among consumers.
• Citing studies that indicate that consumers with bank
accounts are a growing segment for prepaid card use,
OnBudget CEO Jim Collas said, "The No. 1 reason that
banked consumers use prepaid cards is to help them
budget and control their spending."
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Mapa Research from 2013 offers the following best
practices designed to improve usage and engagement.
•
Seamless integration within regular banking services: Optional PFM add-ons
will not be embraced by a populace that doesn't like budgeting. Instead,
functionality should be part of the digital experience.
•
Intuitive and pleasing visuals: To appeal to a broad customer base, the PFM
tools should be easy to understand and highly visual.
•
Segmentation of base: Instead of a one-size-fits-all approach, PFM features
should be aligned with different segments of the customer base (mass, affluent,
Gen X, Gen Y, investors, etc.)
•
Make it social: Allow users to engage with others through social platforms. It
was found that this was effective when building and sticking to goals even
though the integration of social channels and banking is by no means
commonplace in the U.S.
•
Provide encouragement: People respond to ongoing encouragement and
instant feedback.
•
Leverage Big Data: As mentioned by JJ Hornblass as well as reports from Cap
Gemini and others, data must be leveraged more effectively to combine overall
financial relationships, better understand customer needs and build engagement
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"The problem is the lack
of data, and the inability
to tell a financial story
beyond just one financial
institution. PFM must tell
the full data story. Until it
does, only 27 percent of
American consumers will
find it "useful".
--JJ Hornblass, publisher
of the Bank Innovation
Will Mobile Finally Make PFM Popular?

In the online desktop era, Mint is the only direct-to-consumer PFM “mega-hit,” with more than 12 million
consumers using the service. In contrast, there are actually a number of popular PFM tools on mobile
devices; in fact, of the leading 13 free financial tools in the Apple Store, five are personal financial
management apps. Mobile is, and will be, a huge driver for specialty PFM apps. It’s not just the mobile
platform driving usage, it’s the way that some of the key products have positioned themselves with tangible
consumer benefits (e.g., save money by spotting fraud charges) rather than the nebulous (e.g., "manage
your spending for a better life").

Some of examples of mobile PFM apps and their positioning are:
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•
BillGuard is positioned as a fraudulent charge protector and accomplishes that through account
monitoring. It appeals to those concerned about losing money to fraudsters and greedy merchants.
•
Lemon is positioned around mobile wallets and payments, but it also offers account monitoring as a
premium service. It appeals to early adopters wanting to use their smartphone for payments and all
things financial.
•
Manilla revolves around billing and financial statements, but obviously aggregated bank and credit
card statements is a core PFM feature. It appeals to those looking to better manage their mess of paper
bills, receipts and records.
•
Credit Karma focuses on credit scores and debt management, but recently extended into full account
monitoring. It appeals to those wanting to improve their credit scores and better manage debt.
Innovative Technologies

Low income - Done right, personal financial management tools could be especially useful for low-income
Americans, particularly the elderly. These are exactly the types of people who can’t afford to make big
money mistakes. MOOLAH is a mobile app specifically aimed to assist lower-income households. By letting
users create budgets and recommend related social services and financial products.

Level Debuts Budgeting App for Millennials - Level celebrated the launch of its debut product, an iPhone
app that targets Millennials which aims to take the hassle out of budgeting for young people. The Level
Money app automatically analyzes users' finances to calculate income, recurring expenses and
recommended savings each month. It then calculates how much money users have to spend on a daily,
weekly, and monthly basis. Every time users make a purchase, the app gauges how much cash they have
left to spend that day.

Japanese PFM Offering Moneytree Headed to the US - Moneytree, a Japanese personal financial
management app launched earlier this year, has received $1.6 million in financing led by DG Incubation to
bring its app to the US sometime in 2014. Moneytree relies on machine learning and peer data to customize
the experience for users. The company’s CEO argues that there is still room for PFM in the world because
the best PFM product for mobile has yet to be delivered. The app has been downloaded over 200,000 times
and has aggregated data from over 15 million transactions. The service is presently only available in Japan.
Budgets, which are a particularly unloved aspect of PFM, are wisely de-emphasized in Moneytree. The app
will focus on three things in its US launch: cash flow, debt management and retirement savings. A PFM that
is looking to be mobile-first is presumably targeting a younger demographic, to whom “retirement savings”
can sound a lot like “purple unicorns.”
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Innovative Technologies

Finovera Launches “PFM for your Bills” - Finovera recently launched its billing/personal financial
management (PFM) portal. The service competes in the PFM space, but is more focused on the billing and
payments side. Finovera taps into a universal consumer need: organizing, paying and archiving bills that
have been paid, which likely will interest a greater number of consumers than services that merely allow
users to analyze or chart their spending habits. The free platform aggregates consumers’ bill payments
from more than 10,000 billers to provide a single portal through which they can access and pay bills, with
features such as payment tracking, reminders, and the ability to view metrics from up to 12 months of
historical data, and receive alerts when bills are higher than average.

A Start-Up Aims to Bring Financial Planning to the Masses - LearnVest is seeking to disrupt the traditional
model, and bring financial advice to a wider market by making it more affordable. LearnVest, which started
in 2009 as a budgeting Web site directed at women, just added $16.5 million in funding from big-time
investors – including American Express – to the $25 million it has raised since its founding. The funds will
allow it to hire more planners and support staff as well as open a training and adviser hub in Phoenix. Most
financial planners focus on wealthier people, whom they can charge $1,000 to $3,000 for a financial plan, or
collect 1 percent of their assets, on average, to manage their money. In contrast, LearnVest charges a $399
upfront fee and $19 a month, or $608 annually. The company says it is “ripping a page from Weight
Watchers’ playbook” with the most recent version of its service: a seven-step action plan, which begins with
a diagnostic call that typically lasts 45 to 90 minutes. Clients then connect all their accounts to LearnVest’s
online “money center,” which captures transaction data that is used by the advisor to help formulate a plan
to achieve their financial goals.
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Innovative Technologies

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Yodlee’s Tandem - Personal finance management vendor Yodlee has won numerous awards for its Tandem
product, which is a financial collaboration tool. Tandem is expected to go live in mid-2014 with financial
partners, but a preview of the service shows some unique attributes. Tandem is the first app allowing users
to establish secure “financial circles” of friends, family, business partners and advisors in which to manage
and discuss shared finances. Members of a circle can tag transactions for review, upload important financial
information, complete a variety of account transfers and payments, and discuss various items in a shared
space. Circle creators determine the level of access other members have to various accounts – for example,
a parent could allow their college-age children to request and receive reimbursement for textbooks without
direct access to the family bank account. Tandem claims to be ideal for situations requiring secure
communication, complex money movement and careful financial planning including:

Caring for elderly family members

Communicating with financial advisors

Working with small- & micro-business partners

Managing a child’s finances, especially in college

Planning social engagements like group vacations to birthday dinners

Setting budgets with spouses

Tracking shared expenses with friends and roommates
Innovative Technologies – Simple & Moven

Simple and Moven - These companies offer banking apps that combine planning, tracking, and goal-setting
with traditional online checking and savings account services. Users of these apps, treat them as they would
a bank. Both Moven and Simple are backed by chartered, FDIC-insured banks that hold users’ money and
issue the debit cards. “There is a safety and soundness issue,” says Jennifer Tescher, CEO and president of
the Center for Financial Services Innovation. “Banks are regulated.” But with the Movens and the Simples,
the customer has no relationship with the traditional bank. Google, Facebook, or Apple will eventually offer
online banking services as Moven and Simple have done, and these services are sure to be much easier to
use and more powerful than what an old school bank can offer.

It is the goal of Moven to leverage the power of the smartphone as the primary payment device and to
provide immediate feedback with every user’s spending decision. Moven's PFM)interface called MoneyPulse
analyzes spending behavior and provides visual cues (green, yellow and red indicators) to let customers
know how they are doing compared to past behaviors. MoneyPath charts a customer's spending over a
month's time to allow the customer to understand spending patterns. A unique feature from Moven
integrates the MoneyPath financial timeline with a customer's Facebook social timeline allowing a customer
to see the impact their social life has on their spending habits (linking a purchase or spending decision with a
check-in or status update).

Moven's mission is to encourage customers to be more aware and responsible with their financial behavior
without being too judgmental or intrusive. The Moven team has a psychologist, behavior specialist, user
experience specialist, designers and experienced banking industry professionals on staff. This combination
is behind the unique skill set that Moven believes is needed to develop tools and provide ongoing insight
into better personal money management.
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Please don’t hesitate to contact:
Jim Kelly
Research Director
ORC International
212-463-6395
[email protected]
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