Personal financial management (PFM) applications should be one of the hottest topics for banks in Asia today. Mint.com has more than 10 million users. That is an enormous number and it proves that customers are interested in managing their money. Moreover approximately 90% of users say that PFM helped them to improve their financial habits.

Though there are some players in the market, who have already launched PFM, I know from my conversations with leading banks in the region that many are still considering a PFM launch to engage their customers.

But what is quality PFM application and why is it relevant? Is it just the categorization of expenses and income?

A good starting point is the introduction of transaction categorization. This helps customers to keep track their spending and also provides an overview of their overall spend behavior. Presenting this graphically help customers manage their money more wisely.

There are tools such as the budget planning where monthly or annual budgets can be defined for every category. Goal planning or the creation of saving goals can help customers to define and reach their future dreams or plans and the net worth. It is basically a general ledger for bank customers.

This is all well and good, but what is the use for the customer and for the bank?

There are 3 key benefits:

• Increased customer satisfaction
• Increased customer engagement
• Cross selling opportunities

Obviously, the first two bullet points depend on many things. However there is research that shows that implementing PFM will highly influence customer behavior. E.g. more online account opening and term deposit creation, more website visits, more time spent in online banking, improved loyalty, longer customer lifecycle, etc.

Besides all this, the cross selling opportunities are very interesting and diversified field for financial institutions. UBS Singapore is just one example how the available data can be used.

The Network Advertising Initiative conducted a study measuring the pricing and effectiveness of targeted advertising. It revealed that targeted advertising:

• Secured an average of 2.7 times as much revenue per ad as non-targeted "run of network" advertising.
• Twice as effective at converting users who click on the ads into buyers*

One of the key benefits of the PFM is that new data about customers’ financial needs will be available for the bank. This can be very powerful as it allows the bank to make accurate, valid and personalized offers. This can be done using either simple messaging tools or more complex online marketing solutions which can be integrated with the bank’s internet and mobile banking platforms.

In summary Asia is ready to launch the next phase of digital revolution with PFM, but banks must also have to have a long term vision for this journey.

*source: https://www.networkadvertising.org/, Wikipedia