It's Halloween. You've stocked up on the best candy and your house is decked out in ghoulish decorations as you prepare to handle the rush of excited children. Unfortunately, despite all of the preparation, nobody is knocking at your door.For many financial institutions, this is the same feeling they have had as they have introduced personal financial management (PFM) tools to a less than overwhelming consumer response.
Arguments across the industry continue over the potential impact and adoption of PFM tools. Despite topping the charts in hype and media coverage over the past several years, some believe that PFM may always fail to deliver in terms of usage rates.
A 2012 survey by the Federal Reserve shows that 21 percent of consumers currently use a PFM tool (this includes any program or website used to track household finances). Aite Group shows that the percentage may be closer to 27 percent when all PFM options are taken into account. However, there is still potential for growth in this area, with an additional 14 percent of consumers indicating a desire to use PFM tools.
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| Aite Group, Sept. 2012 |
According to Javelin Strategy and Research, nearly two thirds of consumers in the U.S. would like to see all of their financial accounts consolidated in one place (which continues to be a challenge for many PFM applications). Javelin also reports positive consumer feedback to the primary features of a PFM solution as shown below.
Studies also emphasize the value a financial institution can generate by providing a PFM solution that is adopted and utilized by its account holders. These studies show that on average, retention of account holders that use PFM improves by 4% over those that use online banking alone. From a customer acquisition perspective, this can make a huge impact on the financial institution’s bottom line since the industry average for acquiring a new account holder is around $250.00. Assuming an online user base of 100,000 account holders, this equates to $1,000,000 in savings.
PFM Hurdles to Adoption
So, if the benefits are there from both the consumer and financial institution perspective, why are a relatively few taking advantage of these 'treats'? Some point to a lack of functionality within the early PFM offerings that have driven the trend since about 2005. Others say that the financial institutions offering PFM as a complement to online banking have not correctly packaged and sold the service. Still others point to the fact that, while people say they want to manage their finances, a significant proportion of those households simply want reports around what they have done as opposed to what they should do (See Ron Shevlin's Snarketing 2.0 'PFM is Dead, Long Live PFM').
According to Celent, the barriers are multifold and include technology, experience and behavioral hurdles.
Could an Enhanced User Interface (UI) Help?
MoneyDesktop is doing more than just putting lipstick on a pig – its patent-pending BubbleBudgets combines colors, variable sizes and movements to give users an undeniably clear picture of their budget status on a yearly, quarterly, monthly, weekly, or even daily basis.
Use this link to understand the power of this highly visual and engaging solution.
While initially introduced as an online PFM application, MoneyDesktop now includes an even more robust MoneyMobile™ application for smartphones and tablets (demo below). Each application leverages the highly engaging visual elements that made the online application a success. “User experience is absolutely critical no matter what the device,” said Caldwell. “That, paired with the power of our software, is what makes it work. Our mobile and tablet solution have accelerated the path that MoneyDesktop was already on - which was to make sure that peoples’ experience of managing their personal finances was an amazing one.”
As opposed to viewing all of the delivery channels independently, MoneyDesktop introduced it's Sync Engine at FinovateFall in New York this year. With this tool, data is synched in real-time across all of a user’s devices, and intelligently updated when one device is disconnected from a data signal. The firm also is about to introduce HTML 5 Widgets that will emulate the design available for phones and tablets on a bank's online banking site. Widgets erase the line that has historically divided PFM from online banking, providing compelling data visualization that is displayed front and center on the Fi’s online banking interface.
Working With Financial Institutions and Outside Providers
According to MoneyDesktop founder Ryan Caldwell, "While many of the PFM providers were trying to copy the success of standalone solution Mint.com, we saw more opportunity in creating a cohesive slew of benefits for consumers, financial institutions and online banking partners." Taking this approach of partnering for an enhanced offering, MoneyDesktop has forged close to 25 partnerships, including industry powerhouses such as First Data, Sybase and Visa.
According to Caldwell, “Our number one goal is to offer the ultimate user experience for a financial institution's customers through strong partnerships with core providers that provide the most innovative financial technology solutions. Research shows that users want to dive deeper into their finances, and we are creating an experience that allows them to do that. This, in turn, creates an increase in customer loyalty - making it a win-win for both parties.”
Additional Enhancements
Like a few financial institutions have done with standalone services, MoneyDesktop is working on an augmented reality solution that leverages augmented reality to visually guide a user, using the camera view, toward the closest and best accessible branch or ATM locations. Imagine a portable GPS system that allows you a 360 degree view of locations and distances as you move your mobile device in different directions combining computer generated data with your actual surroundings.
Will Consumers Respond?
Will this combination of enticing form and powerful functionality be enough to move the needle and get customers to embrace a tool they have so far only accepted marginally? Is there a revenue potential to this offering that product developers and marketers can take advantage of? Has MoneyDesktop found the secret formula to success?
The team at MoneyDesktop definitely believes they have found the code to the customer's heart (and hopefully wallet). They firmly believe that the old style of plugging in numbers and watching bars move up and down is dead. They feel that consumers want to interact with their money and they want to do more than look in their financial rearview mirror.
To date, MoneyDesktop has proven this with FI and consumer adoption rates that trump the industry norm. In the company’s FinovateSpring demo, Caldwell stated that the industry targets PFM adoption rates of 10 to 15 percent, while some MoneyDesktop customers have reached adoption rates as high as 65 percent within a year.
As Ron Shevlin and Aite highlighted in their study, Strategies for PFM Success, the goal is to provide forward looking, executable goals to help consumers get out of debt, or simply spend money more wisely. To succeed, the tools also must create a seamless integration between the financial data and the myriad of devices people rely on these days.
“At the end of the day, users need to accomplish the objective for which they are using the product: 'I need to understand my finances, so I can make smart financial decisions.’ If we can make that experience visually appealing, compelling and fun to use, it will draw the end user back into the product,” confirmed Jason Cragun, Product Development Director at MoneyDesktop. "Particularly in a mobile or tablet device we can emulate real world experience like never before…a swipe, a touch, a gesture - these make the money management experience more tangible and engaging in a way that consumers have come to expect based on their other digital experiences."
The Marketer's Role
Obviously, the first role as a marketer will be to effectively market the PFM service to customers. I believe the best way to accomplish this is to immerse all employees into the product first so they can provide compelling examples of the benefits of the product to customers. In addition, it is important to provide 1:1 demonstrations of the product since it is difficult to show the benefits of how a customer can manage their finances through even the best video.
Finally, once you have 'sold' the PFM solution to your customer, what are your objectives now that you’ve just become the hub for their financial data? With the account holder as the central focus, all of their other checking and savings accounts, credit cards, lines of credit, home loans, etc. are now associated with your institution, even if they are held elsewhere. You have an invaluable 360 degree view of your account holder that opens the door to nearly unlimited cross-sell opportunities, as well as the chance to take their business away from your competitors. That should make any multichannel strategy easier to implement.
Additional Insights
Consumers and Mobile Financial Services - Federal Reserve (March, 2012)
How PFM Can Set the Stage for One Stop Online Banking and Define Mobile Banking - Javelin Strategy and Research (Dec. 2011)
Strategies for PFM Success - Aite Group (Sept 2012)
Personal Financial Management 4.0 - Online Banking Report (June 2012)
Personal Financial Management: The Devil is in the Details: Celent (August 2011)
Note:
I am not the only person who has been impressed with what MoneyDesktop offers. MoneyDesktop has left an impression after virtually every show at which it has presented its products, garnering six out of six Best of Show awards in the past year, including FinovateSpring and FinovateFall 2012, CUNA Technology 2011 and 2012, CU Water Cooler Symposium 2012 and BAI Retail Delivery 2012. While awards do not necessarily lead to success in the marketplace, I feel this approach to PFM could help move the needle on both acceptance and usage.
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