Personal finance management tools enable an individual to track various expenses and better manage his or her money. Some of the features offered by such tools are single view of various accounts like checking, savings, loans, term deposits, credit cards
etc. with various institutions, categorize and set limits for various categories of expenses, get alerts or notifications when exceeding the set limits. These tools also have capabilities to auto categorize the various expense on actual basis and represent
them graphically and also calculate their net worth.
Shopping habits of Indians are changing fast for reasons like increase in younger population, exposure to global lifestyles, increase in income levels and disposable income, availability of new products and brands, easier access to credit, increasing brand
awareness etc. Rather than need based, many times their spending is impulsive and the expenditure is likely to go out of control. The focus on savings also decreases in such cases leading to financial indiscipline.
The usage of personal finance management tools could bring in some kind of financial discipline by allowing setting limits for various categories of expenditure, setting saving goals etc. The alerts indicating overshooting of expenditure could help them
rethink before actual spending. Their net worth display could lead them to think in terms of increasing savings and increasing their net worth.
So banks in India should focus on customer penetration for usage of personal finance management tools which is very minimal as of now. They can look at offering this service free of cost for customers having a predefined relationship value. They can also
look at aspects like waiver of certain types of charges for customers who use their personal finance tool or offering some additional benefits. It will also help banks in marketing their other offerings like insurance, mutual funds and other savings products
through these tools.
In the long run it will be beneficial to both individuals and banks if banks are able to increase customer penetration for personal finance management tools.