Goodbye PFM, Hello PFE (Personal Financial Experiences)

Goodbye PFM, Hello PFE (Personal Financial Experiences)

Personal Financial Management – PFM – has been a worthy goal pursued by many providers, yet consumers continue to ignore its possibilities. Rather than trying to incrementally expand the share of 10-12% of PFM users, banks should instead focus on the next stage in the evolution of personal finance: Personal Financial Experiences, or PFE.

We’re big fans of PFM (Personal Financial Management)…conceptually. We think that it has the potential to help people better control their finances and live happier, less-stressed lives. And yet, despite numerous efforts over the years, traditional PFM has not gained significant marketplace traction. It’s too cumbersome and inconvenient, while crucially often serving up bad news – and who wants that? At the same time, banks have recently begun to focus wholeheartedly on the customer experience of their clients, seeking to improve and coordinate the various interactions that consumers have across multiple and diverse touchpoints.

The convergence of these two trends is PFE, defined as A coordinated set of customer interactions that pushes and provides customers relevant, timely information and advice to enable them to live more informed and proactive financial lives. PFE gives customers the ability to access whatever level of financial detail they want, but focuses primarily on context and appropriate accessibility.

A variety of companies – both banks building their own, and vendors focused on developing white-labeled software – have created a wide range of PFM approaches. Most have historically required a fair degree of intentionality on the user’s part, and treat PFM as a discrete activity – a separate tab or a standalone app, for example. PFE changes that. Users will experience PFE without ever having to call it up; it will just happen to them via an alert on their mobile, an idea from a branch representative, or an unexpected landing page on their laptop. The “E” stands for Experiences, plural. PFE isn’t just one touchpoint; it encompasses the wide variety of interactions that a consumer has with her financial institution. Today’s Digital banking will, in fact, become PFE. When banks move to the end-state of PFE, customers will no longer have to choose to manage their financial lives (or by not choosing, default to unmanaged ad-hocracy); instead, financial management will happen in the background, facilitated and orchestrated by the bank, as part of the overall relationship.

Three key principles provide the foundation of a robust set of Personal Financial Experiences.
1 Automatic: Users don’t have to put much conscious thought or effort into entering the data or even asking for guidance. The system gathers that information and proactively provides nuggets of advice and discrete, concrete calls to action.
2 Intuitive: There is no learning curve. Just as kids can start using a new mobile phone out of the box without reading any sort of manual, PFE will be intuitive and user-friendly. PFE becomes normal digital banking.
3 Relevant: PFE will deliver only the information needed at the appropriate time. No longer will a user be confronted with a huge dashboard of charts and dials confusingly presented. Relevance and contextuality will rule.

The iPod wasn’t the first MP3 player; it built on and refined pioneering work done by others. So, too, is PFM the first step in the journey to PFE; we’re not there yet, but we’re well on our way, helped by advances in technology and the incremental changes that FI tinkerers continue to make. We’ll be exploring this concept in greater depth over at; please check back in, or reply to this post, if you’d like to learn more.

Moven inks deal with TD Bank – For PFM?

Moven inks deal with TD Bank – For PFM?
The rumors have been swirling for some time now that Moven was going to sign up a Canadian bank. This was announced today and I read about it in The Globe and Mail. Curiously, the article is titled, “TD Bank helps its customers pinch pennies with new app.” What does this mean exactly for Moven and TD? Is TD going to start a digital only bank/account or are they merely going to add PFM capabilities? It’s not clear to me if this will require the opening of a new account or not. I’m also not clear on if this will be a separate app or if it will be integrated into the existing TD apps. It is however quite clear that TD is honing in on PFM capabilities.
“We’ve been interested in [personal financial management], but adoption is very low.” – Rizwan Khalfan, SVP and Chief Digital Officer, TD Bank Group
The Canadian banking scene is super conservative, so this is no doubt an interesting move. This deal can provide great opportunities and also comes with some challenges. Great opportunities:
  • Banks absolutely need to try new things. Kudos to TD for taking a leap here in an effort to innovate and try something new. Their recent mobile wallet announcement is another great example.
  • Canadian consumers could benefit from new, exciting and useful mobile tools. The Canadian mobile landscape has been pretty quiet, with the most recent “innovation” being the launch of mobile remote deposit capture by some of the banks. There have been interesting mobile payments announcements (e.g. RBC and Bionym), but not much as it relates to classic banking.
  • Consumers need help managing their money and turn to their bank for advice. Our US consumer survey and Canadian consumer survey point quite clearly to this. Americans and Canadians prefer to use bank provided tools to manage their personal finances.
Possible challenges:
  • Adding features to TD’s simplistic mobile app could present technical and user experience challenges. Moven has a keen focus on the user experience. The existing TD smartphone app – well, not so much. TD’s Canadian tablet app is slow and buggy. We could not even install this app on our Android test tablets due to compatibility issues. This leads me to believe that TD will either completely overhaul their app or release Moven as a separate app/account.
  • Most PFM endeavours have not been very successful when it comes to customer adoption. Will Moven and TD manage to figure out how to get customers on board and actively using PFM? This is going to be extremely challenging. Celent has done all kinds of research on PFM and will be publishing a fresh report on this topic in the new year. The report will encourage banks to take a completely different approach to PFM – stay tuned for our insights on this topic.
  • The viability of a digital only bank is questionable. Can Canada or the United States sustain a digital only bank? Is there a future for the neobanks? See the following blog post for our viewpoint on this. The Canadian bank switch rate is quite low overall, though it is quite high (13% in 2013) for the 18-25 year old segment. Neobanks have a place, though they will have difficulty being successful in the near term.
Overall, I think this is a great announcement. I love the fact that TD is going to try something new here, and attempt to shake up the market a bit. I’m looking forward to seeing how this one plays out.

Banks as Coaches, not Scolds

Banks as Coaches, not Scolds
Soccer season is starting in New England, and I’m resuming my duties as an assistant coach for my daughter’s team. Just as our players strive to improve, so do I try to improve my coaching, and one of my key functions is to try to change player behavior. I do that through a variety of ways: through explaining, through modeling, and through feedback. It’s the last point that I want to focus on, because the way in which a coach gives feedback is critical, not only for the specific point in time, but for future interactions. Very simply, there are two types of feedback: positive and negative. The coach can say, “Great pass to space, Jane,” or, alternatively, “You missed Sarah on her run down the sideline, Jane.” Guess which one Jane reacts better to (and which one her teammates notice)? What does this have to do with banking? Celent (together with many banks) has been talking a lot about the need to improve and solidify the customer relationship. One way to do this is to help the customer be more in control of their finances. This can happen when the bank gives feedback. Personal financial feedback, just like soccer coaching, can be positive or negative, and just like soccer, guess which one is more effective? And yet, most banks focus on providing unpleasant or negative news: “Your account is below the limit you set” is a relatively benign example, while “Your check has been returned for insufficient funds” is a more substantial one. It’s much more rare to see positive reinforcement: “Congratulations, you’re on track for the savings goal you set.” Simple, for one, is on to this, and it, together with a host of other features, led BBVA to buy it. Monitise, too, is touting “cuddle” alerts that seeks positive occasions for bank touchpoints. A bad outcome for banks is that their customers start to ignore them because they simply don’t want to hear more bad news. “Oh, it’s my bank telling me that I’ve done something wrong. I won’t pick up / open the envelope / check the email.” Then the bank has lost almost any opportunity for enhancing the customer relationship. As a quick aside, TD Bank recently hit a home run with a campaign that went viral as it thanked customers in the most personal way possible. 4 minutes, 11.1 million views as of September 1; check it out on Youtube: What can your bank do to be a coach instead of a scold?

Finovate Europe 2014: Some Key Takeaways

Finovate Europe 2014: Some Key Takeaways
Finovate just ended yesterday, and it was great to see all the new and interesting ideas floating around the financial services space.  For those who may not know, Finovate is a two-day event that showcases some of the best new and innovative things happening in financial services technology.  Over 60 companies coming from all over the world  presented this year, taking part in the rapid format that gives each presenter 7 minutes to show why their product is worth the viewers’ attention.  The event can also be a great networking opportunity, as many of the attendees are from large institutions or influential VCs.

Figure 1: Number of Presenter Products with Aspects of Each Category

 Untitled Here are some key takeaways after watching most of the presentations:
  • PFM is still going strong:  Banks have been declaring the end of PFM for years now, yet the topic is still one of the most talked about at every Finovate.  At Finovate Europe, PFM was the most prevalent.  What does this mean for the institutions?  Well, first off, it’s obvious that entrepreneurs still see the value in PFM tools.  Banks, many of which adopted PFM solutions long ago, have shrugged at the lackluster adoption, subsequently declaring PFM a failed experiment.  Financial institutions themselves are partly to blame, hiding these platforms in menus, barely showing any desire to market the products. Yet the biggest problem with PFM is shared by all, vendors and banks alike.  PFM doesn’t add value!  Let’s just assume most people want to know how much they spend on coffee each month (I don’t!). What comes next?  Where’s the action?  The fundamental problem with PFM is that the way the data has been leveraged to truly provide value has been disappointing at best.  Until the quality of the data is there, PFM won’t be in the mainstream.  A secondary concern—the misconception that most vendors buy into—is that PFM can be fun, succeeding through cleverly designed games and well-designed UIs.  I hate to say it, but PFM will never be fun! Nevertheless, there were some interesting takes on PFM this year that could offer some new ways to think about it going forward. A company called Tink takes financial data and creates insights for the user like where you spent the most money in the last year, largest one-time purchase, most frequent spending location, and others.  The difference is that these are non-intrusive ‘stats’ that show up only if a user scrolls down from the landing page on the mobile app.  Three takeaways from Tink’s product: everything is done on the bank side, it’s is more interesting than visualizations of spending categories, and the analysis requires nothing from user.  Meniga, a PFM success story in Europe, uses demographic data to help small businesses find market opportunities. It provides competitors’ sales data, locations, profitability, among other things.  It’s not PFM is the strictest sense, but that’s probably a good thing.  PFM needs a little shaking up
  • Moving Mobile Banking Beyond Transactions:  While not a new topic, this was a common theme across a variety of presentations.  The most common involved using the camera to assist in account opening or paying bills (see Kofax, Top Image Systems, and Axa Banque).  Mitek and US Bank have been at this for some time, but the rush of new start-ups looking to fill the gap in the market is telling.  As mobile banking becomes more common, and adoption increases, consumers’ appetite for mobile-based interactions will broaden.  Banks are not only beginning to offer consumers the ability to do more complex transactions via the mobile device, but they’re opening up ways for financial institutions to monetize the channel.  This will effectively make ROI much more tangible, doing away with the misconception that the value of digital channels is ambiguous
  • Replace the Password: Is the password dead? That was the question asked by Wired Magazine in November of 2012, and something that has been on the mind of Celent for quite some time. Finovate produced no shortage of companies looking to innovate on financial security.  Finovate veterans, Behaviosec, continue pushing their gesture-based biometric product that learns how the user moves and interacts with the device to create a confidence score for use behind the scenes.  Encap uses the mobile phone as an authentication device for approving transactions or logging into digital banking.  This was the second most discussed topic at Finovate.  While biometrics is already used in some places globally, the practicality of such solutions is dubious at best.  Security needs to start becoming a little more practical.  One of my favourite presentations was from Feedzai, where they use social media data scraping to assess fraud risk.  For example, if I just checked in at a restaurant in San Francisco, then it’s likely that a transaction from somewhere else is fraudulent.  A few took to twitter to question whether customers would be ok granting banks access to their social media lives.  If Citibank starts poking people, then maybe I could see the point, otherwise, it’s a practical application for enhancing security.  Besides, most social media information is already public anyway
  • Lots of Front-end, Little Back-end:  One thing Finovate teaches us all is that there is no shortage of great UI designers.  One thing Finovate doesn’t teach us is that banking is messy once you start connecting that nice-looking front-end to the messy back-end.  Are most of these front-end products from Finovate really bank-ready? I’m not convinced.  Large vendors like Misys, Fiserv, and Temenos may not have won best in show, but with integrated backend products, they’re in a much better position to succeed. One of my favorites was Five Degrees, a Dutch back/mid-office solution that runs in the cloud and offers a truly innovative BPM product.  Other than that, good examples of back-end innovation were scant
  • Social Collaboration:  It was interesting to see different idea behind leveraging crowd-sourcing and social collaboration.  Nous presented a product for investments that incentivizes users to play a game that aggregates data based on the players’ outcomes.  A company called MyWishBoard uses collaboration, similar to SmartyPig, for goals and wishlists list that can be shared via social media with friends.  Leveraging the power of crowds has been difficult to accomplish in financial services, and most social strategies have revolved around marketing and customer support. While some of these ideas may not be the best business ideas, it’s nice to see different takes on leveraging the power of social
  • No Branch Channel Innovation: Absent from the Finovate line-up were any innovative ideas around branch technology.  Celent has written a number of reports looking at branch technology, and there is undoubtedly still much to talk about in this space.  The closest the show came was with JHA’s Luminous, a Dropbox-like secure storage cloud application for bank documents.  Branches are changing, but they aren’t going away, at least not anytime soon.  Banks have been doing some interesting things in the branch channel, but there are still plenty of innovative ways to maximize the brick-and-mortar experience. Celent did a recent consumer survey showing that branch channel adoption is still very high among consumers, and the first choice for important decisions. Considering the adoption gap between PFM and the branch, the low activity is surprising

What Is the Cost of Cool?

What Is the Cost of Cool?
I was watching TV the other night and was quite puzzled by the following Citi commercial: It’s natural for credit card issuers to want customers to increase card spending. However, this is a a sharp contrast to the message that banks send that they want to improve their customer’s financial well being! There are so many poor financial lessons in this video that I don’t know where to begin. On the other hand, Citi offers financial tools to “help put you in control.” They also offer a financial education site for kids and teens with lessons on money management. There’s even a lesson titled, “What Is the Cost of Cool?” While Citi has different divisions/groups at work here , the customer views the bank as a single entity. There is certainly a cost to cool in Citi’s commercial spot. Banks have to work on unifying their messaging and find win-win scenarios that improve the customer’s financial well being.  

Is Online Banking Dead?

Is Online Banking Dead?
Mobile banking is clearly a huge trend. Financial institutions have embraced mobile and are slowly but surely moving forward with updated apps, features and functions. I spend a lot of time talking to banks of all sizes about digital banking. From tablets to smartphones, mobile banking has dominated most of my conversations with banks and software vendors in 2013. Whatever happened to good old online banking? Are banks working on improving it? Are they spending money on online banking enhancements? Whatever happened to the promise of PFM? How is this all going to play out as we move into 2014? Banks can’t afford to drop the online banking ball. There are several key reasons for this:
  • The online channel is still the most popular with consumers of all ages. The results of our most recent consumer survey (September 2013) are quite clear.  While mobile is certainly growing in importance and popularity, online still rules.
  • Most tablet banking apps are pitiful. Kudos to the banks that have ventured down this road as it’s an interesting and exciting space. However, we recently reviewed the tablet apps of the top banks in the US, and most can’t compete with the features, functionality or experience of classic online banking. I recently spoke with a bank that had just finished doing some customer research to evaluate how customers were using their tablet app. Some customers had 2 programs running simultaneously on the tablet – the banking app and the online banking site in the browser – the simplistic nature of the standalone app simply wouldn’t cut it.
  • Digital banking needs to be more than a transaction hub for balance checks, bill pay and transfers.  Commerce / shopping, PFM, financial education, and so much more belong in online banking. They also belong in tablet banking, and pieces belong in smartphone banking –  but that’s a different yet complementary story.
Online banking isn’t dead, it’s a critical component of a bank’s digital banking portfolio. Banks need to balance their budgets accordingly so that they are able to efficiently invest funds in a common framework that can serve the customer. Users expect to pick up any device and have the appropriate experience. The burden is on the financial institution to provide it.

Playing the PFM Adoption Numbers Game

Playing the PFM Adoption Numbers Game
I was very intrigued by an American Banker article that was published yesterday – Answering Call for PFM, Tenn. Bank Rewarded with 25% Adoption Rate. The article talks about a 25% PFM adoption rate at Wilson Bank & Trust. This stat certainly sounds positive given some of the adoption figures we have seen to date. The article did however raise a key question. What really is PFM adoption? If banks succeed at PFM online banking they are going to be measuring online banking adoption and engagement. Yes, usage of specific PFM tools can be tracked, but I am more interested in how PFM is blended into the overall online banking experience. The good news is that American Banker has done a great job at digging a little deeper into the figures:
The bank has seen more than 25% of its roughly 20,000 active online banking users adopt the tool. (People sign up through online banking.) Wilson defines active online banking users as those who use online banking during the month.
The bad news is that this metric can be very misleading. I am impressed by the use of a 30 day active statistic for online banking – it’s a good metric. Many banks will use a 60 or 90 day term when referring to active users. I did however get stuck on the PFM adoption stat of 25% of active online banking  users. What does adoption mean in this case? That the user clicked on the tool? Signed up?  Set up a budget? Viewed a demo? I don’t know the answer but I am skeptical that the PFM adoption metric and online banking metric are an apples to apples comparison. In other words, I am questioning if 25% of PFM users are actually 30 day active for PFM tools. Perhaps Wilson Bank & Trust can shed some additional light on this. 25% active use of PFM tools (as a subset of active OLB users) is a pretty decent stat.  This would be worthy of further exploration if Wilson Bank & Trust has achieved this. For Banks – It’s About Time! For Banks – It’s About Time!
There is a reason that user adoption of PFM is so low. Well several reasons in fact, and you can read about it in this report. Thankfully, steps are being taken to more tightly couple PFM and online banking – one of the MANY key elements required to improve adoption.  Intuit announced last week that the time has come for them to integrate aspects of their popular consumer offering with Intuit online banking. I think it’s a great move, and it’s high time that Intuit moved forward with a more cohesive approach to online banking that includes PFM. The big question on my mind – is this move too little too late? Celent has been promoting the concept of an integrated online banking/PFM for several years now. There are a number of banks that have already gone down the more tightly coupled online banking/PFM path, some in more depth/detail than others. Why has Intuit waited so long to make this move? It’s also important to note that this is just an announcement. According to an American Banker article, “pilot tests with banks are starting later this spring, with general availability expected to hit by early next year.” Early next year? I think it’s great that Intuit went ahead and made an announcement – I’m all in favor of stirring up excitement for refreshed online banking. However, assuming Intuit sticks to its timeline, this announcement is still roughly a year in advance of us seeing a generally available solution. A lot can happen in a year, particularly with the constant flow of non-bank startups, innovation and updates to competing online banking solutions, and moves by other financial institutions. Don’t get me wrong, I’m excited about the next generation of Intuit online banking, but things have to move faster if they want to remain a relevant player.  A few key questions need to be answered:
  • Will Intuit’s existing online banking customers move to this new version? The overwhelming majority likely will if this becomes a standard component of online banking (Intuit’s online banking is run in an ASP model). Those that won’t want to move, and that number could be substantial, are ripe for being poached by other digital banking solution providers.  This could also be examined from a different angle. Perhaps Intuit’s bank customers have been pushing for these types of changes. If so, then this could be a great way for Intuit to retain existing customers and go after new ones. Too bad it’s approximately a year away, as that still makes Intuit’s customers ripe to be poached by other providers.
  • How will Intuit’s online and mobile banking customers feel about the changes to the solution? The pilots will provide more information. Intuit has been making iterative changes to its online banking solution, and the frequent changes could prove challenging and frustrating to banks and their customers.
  • Will Intuit be successful at selling this revamped offering to larger financial institutions? That’s difficult to say at this stage. Some of the larger banks are pretty deep into the PFM space already, and they are working with other providers. There are still quite a number of mid-tier and large banks that haven’t touched this space that could be great prospects. Intuit will however need to differentiate itself in a very crowded market.  
Intuit’s updated online banking solution brings many welcome changes. The folks at Netbanker have put together a nice list of the positive changes including, an attractive and refreshed UI, and the ability to import data from an existing account. The solution holds a lot of promise, and I’m hoping that Intuit can move a little faster in order to provide financial institutions with the digital banking solutions that they desire.

Finovate Fall 2012 Recap

Finovate Fall 2012 Recap
I spent part of last week at Finovate Fall in New York (Celent is a proud Finovate partner). I always love the Finovate events – they provide me with a front row seat to examine the latest and greatest in banking technology. I’m primarily interested in companies showcasing emerging technology, and understanding how these technologies and solutions can be harnessed by financial institutions. I’m also really interested in firms that are coming way out of left field – in other words, demonstrating novel approaches to solve consumer challenges. Here are my favourite 7 minute demos (in no particular order): Shopkeep POS. An iPad based POS system complete with inventory management, mobile payments support, and reporting/analytics tools. LearnVest. An online tool for creating and managing a financial plan. Offers a fee-based service to connect you with a financial planner with relatively reasonable pricing. The Currency Cloud. Provide a cross-border payments and forex solution via an API. The API can be used by firms looking to provide cross border payments services. Innotribe Startup finalist TransferWise is an example of a firm that is utilizing this API. Personal Capital. I’ve written about how mass market PFM simply doesn’t work. Personal Capital is basically a wealth management PFM with a super slick UI (online, mobile, tablet). Dashlane. I like shopping online, but despise the experience of shopping using my mobile phone. Dashlane presented an elegant solution to streamline the experience. I’m not a great fan of data being stored locally on the device (encrypted). Most innovative Company:

C.K. Mack. An online investment tool that allows users to invest in real estate income properties. I really love that this is different, but I actually dislike it from an investment angle (per my tweet):


Most Overrated Demo:

MoneyDesktop. This PFM player caters to smaller institutions via a range of partners. To be fair, I really like the MoneyDesktop solution and user experience. I especially like that they have synchronized their solution across online, tablet, and mobile. What I didn’t like was the “bubble budgets” that everyone at the show was raving about:


I got a lot of flack from others about this comment, but hey, to each his own. There is so much more to PFM and what should be encompassed in next gen PFM and online banking. MoneyDesktop has some of that going on, but the demo focused on these bubbles complete with dueling iPads – highly entertaining, but not what I would call innovative or game changing. If you want to learn more about next generation PFM and online banking, come out to my BAI Retail Delivery session on this topic.

Thanks to Jim, Eric, and team for another great Finovate event.

Celent Banking Blog – 2011 in Review

Celent Banking Blog – 2011 in Review
Happy new year! I thought it would be fun to recap 2011 by calling out the top 10 posts on our blog from 2011. The following list is based on total number of unique visits to each of these posts. Some of these are bang on as far as topic interest goes others may be surprising. Happy reading!
  1. ZashPay User Impressions
  2. U.S. Bank Deposit Point: Doing Right Things Right
  3. Tablet Wars: Online/Mobile Banking Will Never be The Same
  4. New ATM Rules on the Block
  5. Will Tablets Change Banking?
  6. Bank IT Spending and Trends: What Does 2011 Look Like?
  7. Celent Model Bank Awards 2011
  8. Is PFM The Future of Online Banking?
  9. U.S. Bank Deposit Point II: Will Pay-for-Deposit Last?
  10. Chase Website – Down Again