As a new analyst researching vendors for digital banking, I wanted to share an observation as eBusiness and Channel Strategists are making decisions about digital financial services investments. In the last few months, I’ve interviewed personal financial management vendors and banks about their PFM implementations. One notable theme is bubbling up to the surface, what role does PFM play in online banking’s future?
With notable success in driving higher engagement, vendors and banks report that customers spend between a 2-4x more time in PFM than online banking. While both online banking and PFM have similar goals to increase retention, cross-sell, loyalty, and provide customers with greater insight into their financial picture, both offer different customer experiences. Functionally, the main difference is that online banking supports transfer and self-service capabilities, while PFM does not support transferring capabilities and may loosely, at best, integrate self-service. The biggest difference is customer experience.
- Online banking is transactional in nature. You go there to view your balance, schedule payments, and make transfers. You get in, you get out. Most institutions have masters pushing high volume, low complexity account maintenance tasks to digital channels. The focus has mainly been on automating these capabilities to reduce manual processing to gain further cost efficiencies.
- A siloed design of PFM and self-service capability fragments a financial view. Today, online banking is somewhat static in nature and navigation between self-service and PFM are disjointed. Often times, integration of PFM and self-service are positioned to customers as tabs or links from the main online banking page, thereby positioning both as secondary tasks. Navigational links are so buried, customers are forced to use the hunt-and-peck strategy to find features.
- PFM offers rich insight into financial goals and account relationships. PFM offers a dynamic view of financial information. Information is synthesized into a more digestible format; inviting customer’s to enter their financial landscape to architect their financial goals. It goes beyond engaging customer in financial activities such as paying bills, viewing balances, and self-service, it provides banks a gold mine of customer data on existing account relationships, goals, and needs, critical data for an effective cross-sell strategy.
So the real question is: will online banking and PFM continue to have a bad romance, one where there is little integration or will the focus on upgrading online banking and PFM provide the focus needed to breakdown the silo features and commit to a coupled customer experience? PFM has demonstrated its effectiveness at driving engagement, engagement drives insight, and insight provides a view into a customer full financial picture. Regardless of “what” technical solution you choose, position your most valuable assets first and then build a strong foundation of self-service, payments, and account utilization features around it.
As I continue my vendor research on PFM and online banking, I would love to hear what on your mind as you lay out your money management framework. Feel free to contact me directly. @tiffanimontez