Personal Finance Management: A Service Offered by Banks or an Independent Banking Service?

• Personal Finance Management (PFM) established as an independent banking service

• Solutions available on the market react to new demand and open up new options for customers

• Expansion of the value-added chain to include transparent means of obtaining information

• Integration of an emancipated customer self-understanding as an innovative structure of banking services

• Development of PFM tools into fully-fledged banking offers

The innovations in the field of Personal Finance Management (PFM) are representative of the transformation currently taking place in the classic services offered by banks. While the account statement appears archetypal to banks – and to many clients – innovative products have already begun to exploit the potential of the digital preparation of information. These products enable the user to obtain an overview of personal finances, to manage and steer them; they also realize what is technologically possible and thereby react to changed demands on the part of clients; they integrate a changed self-understanding of clients and expand the classic value-added chain not only by including the factor of information, but also the ability of customers to compile information. These tools are thereby undergoing a transformation from being a service offered by banks to being fully-fledged banking services themselves.

One of the most well-known offers is “Mint”, which has been available in the US and Canada since 2005, and which with 10 million clients has now established itself as a serious player. “HelloWallet”, “Buxfer”, “mvelopes” offer similar services for customers in the US, while “Geezeo” and “Yodlee” provide white label solutions for financial institutes. In South Africa, “22seven” provides a PFM service based on “Yodlee”. In the German market, “”Outbank” and “iOutBank”, “finanzblick”, “S-Banking” and “MoneyMoney” are all services aimed at the field of PFM. The Icelandic “Meniga” and the Swiss “Crealogix” services work together to offer white label solutions for the European market (overview in Figure 1).

The concepts in the field of PFM can be distinguished based on the scope of their functions.

• As a basic function, the products aggregate the finance and transaction data of the user and prepare the information graphically. Information preparation according to earnings and expenses belongs to the standard service, as does the availability of the service for all types of devices.

• Additionally, tools integrate different transaction options such as transfers as well as categorization options, for example, in order to define savings goals.

• Finally, some tools offer implementation options for other environments, for example, to conveniently conduct online payments.

For most customers and users, these PFM tools represent a novelty that not only realizes a technological innovation, but also meets a concrete demand. In countries and cultures in which consumption is more strongly based on credit, obtaining a consolidated overview of one’s personal financial situation is anything but trivial. A simplification of this situation is unlikely in light of the expected pluralization of payment options through new technologies such as NFC and Wallets. In addition to the available payment and financing options, there is a complementary need for tools that allow the client to achieve an overview of the personal financial situation. So far, banks are not pursuing this demand as consequently as they are the provision of new payment options.

It is at this point that providers are offering innovative concepts and expanding the value-added chain of traditional bank options. These players aggregate the financial and transaction data of clients beyond the boundaries of financial institutes, prepare the information in the form of graphics, allow the client to categorize information according to specific earnings and expenses and to define savings goals, and some even offer information on refinancing options.

The products are thereby carrying out a paradigm transformation that is particularly apparent in the manner of addressing clients. Clients are actively included in the preparation of information in order to gain new insights and act based on these insights. The products not only provide information, they also enable clients to engage in informed and independent actions.

Most recently, the concepts surging onto the market have been characterized by a new level of development. They place Personal Finance Management at the center of the customer experience, but then from this point on formulate comprehensive banking options including account management and payment functionality. This leads to three possibilities for the future development in the field of PFM.

• The creation of independent tools, not tied to any banks, that offer special solutions for Personal Finance Management.

• Banks integrate Personal Finance Management into their services. This option is supported by the fact that banks possess a high level of trust among clients regarding security and data privacy. The “E-Cockpit” of the Swiss service PostFinance is one such instrument that is being developed in close collaboration with clients.

• New banking concepts place Personal Finance Management at the center of services, combining PFM with account management and payment options, and developing a fully-fledged banking offer from this combination. The US banks “Simple” and “movenbank” are examples of this development.

This new level of development, as it is being realized by innovative banking concepts, provides established banks with a real chance. They can use their technological potential and build innovative services in collaboration with their customers, in order to reflect and integrate the changed customer self-understanding. No matter whether it is banks or other providers who assert themselves in this field – thanks to the options provided by Personal Finance Management, it is the client who will end up being the winner of these innovative developments.

Information + Interviews
http://blog.volksbank-buehl.de/2012/10/13/brett-king-im-interview-banking-longer-place-go-do/
http://blog.volksbank-buehl.de/2012/04/13/personal-finance-management-interview-mit-armin-brun-uber-das-e-cockpit-von-postfinance/
http://paymentandbanking.com/personal-finance-management-losung-der-banken-oder-kommt-ein-dritter/

Mint
http://www.mint.com

HelloWallet
http://www.hellowallet.com

Buxfer
http://www.buxfer.com

mvelopes
http://www.mvelopes.com

Geezeo
http://www.gezeeo.com

Yodlee
http://www.yodlee.com

22seven
http://www.22seven.com

(i)OutBank
http://www.outbank.de

finanzblick
http://www.finanzblick.de

S-Banking
http://www.starmoney.de/index.php?id=s-banking-iphone

MoneyMoney
http://www.moneymoney-app.com

Meniga
http://www.meniga.de

Crealogix
http://www.crealogix.com/produkte/banking-produkte/e-banking/personal-finance-management/

E-Cockpit
https://www.postfinance.ch/de/priv/prod/eserv/cockpit/offer.html

Simple
http://www.simple.com

movenbank
http://www.movenbank.com

Strands finance
http://spf.strands.com