Javelin Strategy & Research’s latest report radically redefines personal finance management for both financial institutions and consumers. Consumers seek PFM solutions to monitor and manage their money more effectively from multiple accounts and multiple financial institutions. Javelin’s report guides financial institutions on how to provide consumers with a “view + do” PFM model right from the moment they log into their online accounts, and not from a tab. This one-stop view offers aggregation of outside accounts, easily view and pay all bills, and categorize spending.
More than 14% of consumers—and 17% of the profitable Gen Y segment—are not managing or monitoring their finances. This creates a ripple effect of problems not only for those consumers, but also for the financial instituions that service them. Consumers’ lack of financial awareness translates into customers that incur penalties and fees and creates risky lending prospects for financial institutions. Javelin also found that while consumers do have concerns about security, privacy, and information clutter around PFM, consumer needs for practicality, effectiveness, and convenience trump these concerns.
“In response to the Durbin Amendment, banks alienated consumers by proposing to charge debit card fees, reduce rewards programs, and eliminate free checking,” says Mark Schwanhausser, senior analyst, Multichannel Financial Services at Javelin. “If done right, PFM gives FIs the opportunity to reposition themselves as the consumers’ ally by giving consumers greater control over their finances, helping them save time, and enabling them to access all their account information in one safe, secure place.”
In the report, Javelin asked more than 2,300 consumers to evaluate a concept of “one-stop online banking” that would enable them to monitor all their financial accounts in one place, pay bills, analyze their spending, transfer funds, and initiate person-to-person payments from a single starting page. The results found that banks are in the best position to provide the PFM model that consumers want. Almost 50% of consumers already primarily manage their finances by logging online to bank sites to check their account balances. Financial institutions can redefine PFM for a mass-market audience, placing it front and center on their websites, rather than hiding it away in a tab. Banks can extend PFM to smart phones and tablets to provide greater always-on access and real-time financial information to the growing number of consumers that demand this type of control.
“PFM is one way banks can attract and retain customers and build customer loyalty, which contributes greatly to an FI’s profitability” says James Van Dyke, president, Javelin.