We at Forrester believe Digital Money Management, often referred to as Personal Financial Management (PFM), is the future of digital banking. But as we find in our new report, The State Of Digital Money Management 2014, available here, it doesn't appear to be the present. Fewer than 22% of customers in the US and Europe have used a single money management feature in the last 90 days.
Why? It's simple: most people just don’t want to manage their money. They don’t want to budget, as in doing any work. They don’t want insight, beyond one or two bite size chunks. And they don’t want to save. They may think they want to, so they’ll set up a savings goal, but most won’t stick with it. Even if they do, it's not about the saving. It’s the buying – that’s the thing they actually want to do.
Even with today's money management, I suspect many of the best users actually spend more, not less, as a result. Few banks measure this – and that's another blog – but it's an instinct I know some clients share. When customers have more transparency around their options, they feel empowered to buy more.
Those users who have no choice but to save often find money management too depressing and give up. Efforts to gamify money management, to make it social, or send “you should save” reminders just alienates them further – the digital equivalent of that unopened bill reminder in the post.
People want to buy, and what they really want to do is buy better. If money management can exist here, in context, with real-time, relevant advice, it will get used and will help people make better decisions. For example: "Steve, you really can't afford this, but if you insist, you need to spend less on x, use this merchant funded reward, or take this pre-approved cash loan".
The other money management – the one we have today, with its savings goals, its budgets and its good intentions – will always struggle for regular use. And because of that, it won't help you – the bank – or your customers.
The money management that helps is the money management that gets used.