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Will the cumbersome administrative tasks for your financials finally be a thing of the past?


PFM, BFM, Financial Butler, Financial Cockpit, Account Aggregator…​ - Will the cumbersome administrative tasks on your financials finally be taken over by your financial institution?


1. Introduction

Personal Financial Management (PFM) refers to the software that helps users manage their money (budget, save and spend money). Therefore, it is often also called Digital Money Management. In other words, PFM tools help customers make sense of their money, i.e. they help customers follow, classify, remain informed and manage their Personal Finances.

Personal Finance used to be (or still is) a time-consuming effort, where people would manually input all their income and expenses in a self-developed spreadsheet, which would gradually be extended with additional calculations.

Already for more than 20 years, several software vendors aim to give a solution to this, by providing applications, websites and/or apps. These tools were never massively adopted, since they still required a lot of manual interventions (manual input of income and expense transaction, manual mapping transactions to categories…​) and lacked an integration in the day-to-day life.

More recently FinTech companies like Mint, Dyme, Digit, Level Money or Moneytree provide tools with a significantly improved user experience and direct integration with banks (allowing to retrieve automatically account transaction information). This has created fierce competition for traditional banks. For example, Mint started in 2007 and has now already 4 million users. Many of these tools are free of charge, since the companies gain the revenues by display advertising for competing financial products. Their advertising and popularity steal the customer interactions a bank traditionally had.

growing number of banks worldwide are now realizing the importance of delivering PFM tools and started building such tools (or integrate external solutions like e.g. Tink) to avoid their customers switching to FinTech solutions like Mint. These bank tools are of course directly linked to the account transaction information of the bank, eliminating any manual input of this information.

Nonetheless the adoption rate of those bank tools remains low (much less than initially anticipated). The main barrier for customers to adopt these tools is the "stand-alone" nature of them. Often the PFM functionality is positioned in a completely separate module (separate "add on" service) within the internet banking platform or banking app, meaning it doesn’t form a fluid integrated user experience when doing day-to-day banking. Some banks have even chosen to offer stand-alone apps, which allow them to be more creative on the look-and-feel and simplify certain security aspects, but of course this results in an even less integrated user experience.

A good PFM solution should be at the heart of the digital banking experience, i.e. tightly integrated with the day-to-day banking. Research has showed that by integrating PFM within the online banking user interface, banks reach adoption rates of more than 25%, while banks with stand-alone applications only achieve adoption rates of less than 10%.

2. Added value for the bank

If online banking has become a must-havePFM is still seen by many banks as a "nice-to-have" tool. Furthermore, the early adopting banks have already made considerable investments in their current PFM solutions, which unfortunately led to disappointing adoption rates and revenues not fulfilling their promises.

The steep rise of mobile banking and rise of open banking gives however a new momentum for extra investments in PFM. The advantages for the bank of a good PFM solution are just too important not to justify additional investments in this domain.

Apart from the fact that PFM is socially responsible and allows a bank to differentiate their brand and service offering from its competitors, it also provides considerable financial benefits for the bank:

  • The PFM market is still in its infancy, meaning that there is still a high growth potential for banks to attract new customers based on their PFM offering.

  • Retention rates and revenues for customers who use the PFM solution of the bank are significantly better.

  • Significant cost savings and risk reductions can be obtained through PFM solutions

2.1. Attract new customers

  • In the US about 1 in 3 households use PFM tools to manage their finances (most households still control their finances on paper), but of those people only 1 in 4 use their bank for this. This means that less than 10% of US households use their bank for PFM services. Apart from certain local exceptions (e.g. Iceland), these percentages are not significantly different in other countries.

  • According to a Gartner survey, 63% of respondents trust their bank more than a third party PFM app and would therefore prefer to use the PFM tool on their bank’s secure website.

These facts clearly show that there is still big potential for banks to obtain significant growth through PFM solutions.

2.2. Improved retention rates for existing customers

Banks that install state-of-the-art PFM tools will also benefit from increased customer loyalty and increased revenues(Javelin Strategy & Research, September 2009).

PFM solutions are sticky applications. Retention rates for customers using PFM tools are significantly better than for other customers. Some banks have seen a reduction of up to 50% in account closings after introducing PFM (OnlineBankingReview, 2010). In a survey by Javelin, 66 percent of consumers who use PFM say the availability of such tools would have a "strong" or "very strong" effect on the likelihood they would remain a customer of their bank.

These improved retention rates can be explained by:

  • PFM users build a history they don’t want to lose (since it’s almost impossible to move the transaction history and budget plans from one bank to another).

  • Through PFM the customer relation can be significantly improved, via a better understanding of the customer’s financial behavior and needs. This leads to more pro-active and tailored advise.

2.3. Improved revenues for existing customers

Revenues for customers using PFM tools are also considerably higher than other customers. Studies have showed that PFM users purchase up to 4 times more financial products compared to non-users and tend to increase their total number of accounts by almost 20% after one year of using PFM.

These increased revenues are explained by the improved customer relationship, but also by:

  • More usage of the online banking platform, providing more contact time and sales opportunities with the customer. PFM users typically login twice as often on the bank’s website than non-PFM users.

  • The bank can become the main financial cockpit for the customer, therefore having the potential to gradually consolidate the customer’s assets and liabilities present at other banks (according to Gartner, the majority of people in developed countries use 3 or more financial service providers).

  • Increased cross- and up-sell opportunities: PFM tools collect an enormous amount of valuable customer data, which allows to generate more personalized, real-time and contextual offers and consequently selling more financial products (like saving accounts, investments, loans…​). Such personalized offers are more valued by banking customers than more generic advertisements.

  • Increased use of cards (debit and credit), since card payments (contrary to cash payments, which are very costly for the bank) allow to have expenses automatically integrated in the PFM tool.

2.4. Significant cost savings and risk reductions can be obtained

PFM tools can also bring significant cost savings to the bank:

  • PFM tools make the online banking experience more intuitive, engaging, personalised and helpful. It allows therefore to migrate financial advise out of costly branches and call centres and into the online channels (mobile and internet banking).

  • Since PFM users prefer their expenses automatically classified in the PFM tool, the amount of cash transactions (often preceded by cash withdrawals, which are very expensive for the bank) will significantly reduce.

  • PFM can lead to a reduced credit risk. The insights into the financial situation of the customer can help assessing much better the customer’s credit risk, when doing a loan approval process.

3. PFM: a term with many faces - Defining the scope

Every time a customer logs in to his bank, he is doing some kind of "Personal Financial Management" or "Money Management", so the term is pretty vague and doesn’t really describe what is exactly meant with it.

In its narrowest definition, PFM consists of tracking and visualizing expenses and income transactions and comparing them with a budget plan.
However, PFM has very strong links with other banking functionalities like:

  • Saving Goal Management

  • Risk Profiling and Risk Assessment

  • Investment Management

  • Credit Management

  • Wealth Management and Financial Planning

  • Business Financial Management (BFM)

  • Management of Payment Contacts

In this chapter we describe these "satellite functionalities". The chapters afterwards, we will focus on the core functionality of a PFM tool.

3.1. Saving Goal Management

Saving Goal Management allows to manage medium- and long-term saving goals or saving dreams.

Ideally Saving Goal Management should be fully integrated with the PFM solution, so that defining a new saving goal will automatically impact the PFM forecasted cash flow and budget plan and vice-versa, i.e. changes in the PFM budget plan automatically adapt the projected date of achieving the target amount for the saving goal.

A good Saving Goal Management tool should provide following functionalities:

  • Define a saving goal by adding pictures and details of the goal

  • Support multiple goal types, i.e.

    • Saving for a large expense, like travel, new car…​

    • Retirement saving

    • Group spending, i.e. contribute with multiple persons to common goal

    • Gift handling, like e.g. in case of wedding or birth

  • Execute simulations on saving goals, like calculating how much needs to be set aside each month or how long it will take to achieve the goal.

  • Visualize saving goal progress and share with friends and family on social media

  • Request people to contribute to a saving goal via social media

  • Contribute to a goal (via a standard payment with specific remittance information)

  • Transfer money from one goal to another or assign money, which is not assigned yet, to a goal.

  • Pay-out a goal (typically when the target amount is reached)

In order to make the user experience as pleasant as possible, gamification is essential. Examples are:

  • A graphically appealing user interface, with pictures of the saving goals and nice graphs on the saving progress

  • Provide regular notifications to set aside a certain amount and making this saving as simple as possible (e.g. via a simple swipe on the mobile phone).

  • Setup personal targets, like e.g. "I want to stop smoking". These targets result in recurring pop-ups asking the customer if he succeeded in his mission. If so, a specific amount (e.g. amount customer would normally have given to cigarettes) is automatically saved.

  • When performing payments round the payment amount upwards. The difference between the real payment amount and this rounded amount is automatically attributed to a saving goal.

3.2. Risk Profiling and Risk Assessment

Risk profiling is the process of determining the optimal level of investment risk considering the expected return-on-investment, time horizon, the financial buffer and the risk appetite of the customer.

Risk assessment is the process in which the risk is measured and compared to the defined risk profile.

These tools are also strongly overlapping with PFM tools and should therefore be strongly integrated. For example, the information in the PFM tool will allow to calculate immediately the financial buffer of a customer, which is an important element in his risk profiling. On the other hand, the risk profile and ongoing risk assessments will be important elements in defining and refining the customer’s PFM budget plans.

3.3. Investment Management

Normally, a PFM solution will mainly focus on liquid asset (current and saving accounts) and short-term liabilities (credit cards). However, when managing long-term goals, investments in the form of buying and selling securities, become an integral part of the "money management" puzzle.

good integration between the PFM solution and the investment management module brings therefore significant added value to the customer. When considering such an investment management module, the standard functionalities like searching a security, visualizing real-time security information, buying and selling a security, managing pending orders and visualizing security positions, will normally already be present in the online banking solution. However, investments can typically not be initiated from the PFM solution, nor do actions (like buys and sells) in the investment module have any effect on the PFM budget plans.

Additionally, banks should think about more contemporary investment management functionalities like:

  • Personalized Real-Time Investment Proposals (cfr. the Robo-Advisor FinTechs like Wealthfront, Personal Capital, FutureAdvisor…​) to:

    • Bring the customer’s portfolio in line with a model portfolio

    • Propose buy recommendations for instruments, which are suitable and appropriate for the customer

    • Propose buy and sell recommendations to bring the customer’s portfolio in line with his investment objectives

    • Propose buy and sell recommendations based on peer investment decisions (investors the customer decides to follow)

  • Create Investment Communities, by letting customers share investment interests, track others’ progress (e.g. track behavior of the bank’s top-rated investors) and compare their investment decisions.

3.4. Credit Management

A strong link with the credits module is also essential. When the PFM tool identifies cash shortages, it should automatically propose credits to bridge the liquidity gap in the cheapest and fastest possible way. This requires real-time and (fully) automated credit origination processes. One possibility to automate this process, is using long-term assets as collateral for short-term liquidity needs (cfr. Capilever -

Vice-versa, each credit which is opened, should also automatically adapt the budget plans to take the reimbursements into account. For variable interest loans, the PFM tool should also be able to simulate the effects of the interest variations on your (long-term) budget plan.

3.5. Wealth Management & Financial Planning

Wealth Management and Financial Planning are services traditionally offered only to high net worth individuals but have important overlaps with PFM. The difference is that Wealth Management and Financial Planning are usually done by a financial advisor within the bank, focusses mainly on the long term and manages money which is available for investments (i.e. not the money for day-to-day consumption). PFM on the contrary focusses on the short-term day-to-day money management and is typically done by the customer himself using the bank’s PFM tools. Furthermore, Wealth Management will often offer also services like tax optimization and estate planning.

A financial advisor providing Wealth Management services will normally make use of 3 systems: a CRM system to manage the customer relationship, a Portfolio Management System to manage and report on the customer’s investment accounts and a Financial Planning tool to analyse the customer’s financial situation.

Especially the financial planning tool has strong overlaps with the PFM solution. A good integration between the PFM solution and the financial planning tool will avoid performing a long onboarding process of customers having to provide the info of their financial situation. Via the PFM solution, the financial planning tool can automatically capture all assets and liabilities, but also get the customer’s categorized spending habits.

Due to the important overlap, it is therefore important that financial planning tools and the advisors working with them, focus on more complex planning exercises. More common planning exercises like saving goal management or budget management, should be as automated as possible, so that customers can perform those activities themselves via the online/mobile PFM tools. In order words, PFM should be considered as the B2C version of the Financial Planning tool.

Ideally a Financial Planning Solution provides functionalities like:

  • A consolidated 360° view of all assets, liabilities and off-balance products (like non-life insurances). In the assets, non-financial assets like real estate, intellectual property, shares in non-public companies, art, collections…​ should also be considered.

  • Personal wealth/net worth estimator (now and future)

  • Generate notifications (similar as the PFM solution) on more complex simulation data, e.g. opportunity to refinance a mortgage when interest rates change, inform the customer if Monte Carlo analysis of the financial plan predicts unacceptable risks…​

  • Goals-based and Cash-flow-based retirement projections

  • Demonstrate the impact of risks and loss tolerance on a financial plan, i.e. so called What-If scenarios.

  • Instantly see the impact of adjusting variables on the financial plan, e.g. show the customer the impact of market corrections, early decease or unexpected costs.

  • Evaluating insurance coverage

  • Tax projections

Using a Financial Planning tool should allow a financial advisor to answer questions like:

  • Can the customer afford to take risks on an investment?

  • How much can a customer borrow to buy a home?

  • What’s better for the customer, using his savings to buy a car or buying it with finance?

3.6. Business Financial Management (BFM)

Where PFM mainly focusses on Retail customers, there is a similar need for SME customers. This we call "Business Financial Management" (BFM). The required functionality is very similar. Furthermore, SME customers are typically also Retail customers, so a common look-and-feel and functionality reduces the learning curve.

If the PFM functionality would be the basis for BFM, there are a few functionalities that BFM needs additionally:

  • Manage ingoing and outgoing invoices (i.e. Accounts Receivable and Accounts Payable), e.g.

    • Digital governance of invoices (reducing paper), including digital submitting or sending to a printing street

    • 1 central view (including all history) of all payments and their corresponding invoices

    • Identify unpaid / partially paid / overpaid invoices

    • Simplify the payment of an invoice (automatically generated from invoice details)

    • Automatic generation of payment reminders to customers (for unpaid invoices)

    • Automatic exchange of information with accountant

    • Reconciliation of invoices with the payment history

  • Business oriented categorizations of income and expenses (i.e. in line with standard categories to be used in company’s annual report), enrich with meta-data and link to associated documents (e.g. order form, tender, goods receipt, invoices)

  • Fiscal and Operational Reporting (e.g. VAT declaration, expense overview for fiscal declaration, cash flow overview for annual reporting…​)

3.7. Management of Payment Contacts

Most online banking solutions have already a module to manage payment contacts. Ideally this module should also be closely linked with the PFM solution to offer functionalities like:

  • Management of aliases (email, phone number…​) of payment contacts, allowing to initiate payments via an alias instead of via the account number

  • Import and export of payment contacts and synchronization with social media contact lists

  • Visualize all income & expenses of a payment contact (i.e. friend, merchant…​)

  • Assign a specific PFM category to a payment contact, e.g. when paying a friend every month 50 EUR since he reserves the tennis court, the payments to this friend could be categorized as "Sports"

  • Create an expected payment (to receive) for a payment contact. This can help as a reminder of which money is still owed from this payment contact. The tool should of course incorporate a simple overview of the unreceived expected payments and potentially send a reminder to your contact about the missed payment.

  • Perform netting between different payment contacts (e.g. group of friends needing to reimburse each other)

  • Link payment contact details with the PFM Financial Calendar (see below in chapter on "PFM functionalities") to show also birthdays (often leading to expenses) on the financial calendar.

4. Which aspects should a best-in-breed PFM tool include?

A good PFM tool is all about helping customers with their financial decisions in a fun, easy and real-time way. A close integration with the day-to-day banking modules (like account overview and payments modules) is the minimum, but other aspects should be considered to deliver a state-of-the-art PFM tool:

  • User preferences: customers should be able to adapt the look-and-feel of the PFM tool to their needs. E.g. a user should be able to adapt the dashboard views, by plugging in different "widgets", giving different views on his personal finance.

  • Cross-channel continuation: PFM should be fully available in all channels and it should be possible to start a process in 1 channel and continue in another.

  • Robust API: the PFM solution should provide an open API, which can be consumed by FinTech partners and in the future by Internet of Things.

  • Gamification: in order to make the PFM experience as fun as possible and give the customer a sense of accomplishment, "gamification" of the customer experience is recommended. Examples are:

    • Show a spending meter with red for bad and green for good

    • Customer can set goals and see himself moving closer (or not) to achieving those goals (visualized like a game quest).

    • Reward customers for using PFM by awarding points or giving virtual stickers

    • Messages in alerting should be expressed in a positive way, e.g. "Great job! You spent less than 200 EUR on clothing this month!" or "Congratulations the balance on your credit card is fully cleared"

  • Data-centric: a PFM solution stands with the data inputted in the tool. This data input should therefore be as much as possible assisted by the tool and any data inputted in other banking modules should automatically be taken over (no double input by the customer).

5. Which functionalities should a best-in-breed PFM tool offer?

Apart from the above non-functional aspects of a good PFM tool, the PFM tool should of course also deliver all functionalities required by the customer to effectively manage his money. This chapter provides an overview of the functionalities a good PFM tool should deliver.

The overview will be split-up in 5 blocks:

  • Financial Situation Overview

  • Categorizing Income and Expenses

  • Budget Management

  • Analysis & Forecasting

  • Pro-active Advise and Automated Actions

5.1. Financial Situation Overview

The PFM tool should act as an account aggregator, i.e. provide a unique overview of the balances of all accounts the customer holds. This means both the accounts at the bank, where the PFM tool is running, as accounts at external financial institutions. Ideally the view should not only include the cash accounts, but provide a holistic 360° view of all assets, liabilities and off-balance products (e.g. insurances) of the customer (at the bank and at other financial institutions).

In order to provide this overview, following requirements should be supported:

  • Customer should be able to input a list of accounts/positions to be included in the 360° view. Remark that customers should be able to define different composition structures, e.g. his individual private financial situation, the financial situation of his business and/or his joint household view.

  • Customer should be able to setup consents to retrieve positions from other financial institutions.

  • Positions (valuated) from the bank and all other financial institutions should be retrieved

  • Customer should be able to create virtual accounts to input non-financial positions (e.g. art, houses, collections…​) or positions at unsupported financial institutions. Transactions/Positions on those accounts should be manually inputted or uploaded via a file (e.g. CSV file).

5.2. Categorizing Income and Expenses

Income and expenses are retrieved from the account transaction history. Those transactions should be automatically categorized in real-time. A real differentiator between PFM tools is the quality of this automation, i.e. best-in-class PFM tools achieve a 99% accuracy in correct categorization. These levels of accuracy are obtained by sophisticated categorization algorithms, using techniques like self-learning and leveraging the whole PFM user network ("crowdsourcing").

Apart from the hidden engine to automatically categorize transactions, this module should also provide functionalities like:

  • Managing categories, e.g. creating personal categories

  • Manual (re)categorisation of transactions, which were not or incorrectly classified. The customer should also be able to define rules to adapt the automated categorization algorithm to his needs.

  • Splitting transactions: it should be possible to split payment transactions into smaller portions which can be categorized in different ways. This process should be handled in an automated way or manual.

    • Automatic:

      • The payment of a credit card bill should be automatically split in smaller portions, based on the details of the credit card bill.

      • Use APIs exposed by third-parties to retrieve more details of a payment, e.g. API of PayPal to get split of a PayPal payment

      • The acquisition of a financial instrument should be automatically split in a portion for the actual investment, a portion for the bank fees and a portion for the taxes.

    • Manual: customers should also be able to manually split a payment in smaller portions, e.g. payment in the supermarket can be split in a portion for "Food & Drinks" and a portion for "Health & Personal Care".

  • Transaction enrichment: apart from splitting a transaction in smaller categorized portions, it should also be possible to enrich transactions with additional data like:

    • Keywords / Tags, allowing easy searching on transactions and provide additional classifications of the transactions.

    • Attach documents, like invoices, appliance manuals, appliance guarantees…​ to the transactions. These documents should be automatically attached (when merchant sends a "Pay Me" request) or can be manually uploaded by the customer. This feature allows the PFM to become a cockpit to visualize all documents related to the customer’s consumption.

5.3. Budget Management

In a PFM tool, the customer should be able to manage his budget (plan). This consists of defining a budget for each category. Such a budget will consist of a frequency (annual, quarterly, monthly, weekly…​ or user-defined) and an amount for each category. The creation of the plan can be fully manual or assisted based on:

  • Derivation from "People Like Me" (i.e. people with a similar financial situation as the customer)

  • Taking income/expenses of a chosen month (e.g. last month) to act as first version of the budget. The customer can then further fine tune.

  • Taking average income/expenses of last X months to act as first version of the budget.

After the budget is created the system should offer:

  • Comparison of the budget plan with past actuals or with "People Like Me"

  • Automatic adjustments and data-driven suggestions based on the actual spending patterns.

  • Automatic adjustments, based on other financial transactions (like opening a new credit or buying/selling a financial asset)

5.4. Analysis & Forecasting

The "Analysis & Forecasting" part of the PFM tool is all about visualizing where the customer’s money goes to or will go to.

Typically following views should be available:

  • Visualize the monthly history of income/expenses per category. Within each category, customers can drill-down to see which merchants they frequent.

  • Visualize average income/expenses per category

  • Visualize the comparison between the actual income/expenses with the budget plan

  • Visualize the comparison between the actual income/expenses with "People Like Me". The customer should be able to define the "People Like Me" (i.e. other customer of the bank), based on characteristics like age, location, profession, number of children…​

  • Show the available "Free to Spend" amount per category for this month

  • Visualization of forecasts, i.e.

    • Future income predictor

    • Future expense predictor

    • Future savings predictor

    • Expected Cash flows estimation (expected income - expected expenses)

  • Show a Financial Calendar, i.e. a heat map in the form of a calendar showing the daily, monthly and yearly (past and future) spending patterns. For the future spending patterns, a bill can be immediately paid by clicking on the calendar.

Apart from those screens, the "Analysis & Forecasting" module should provide a service to all other banking modules to provide the impact of an action on the personal finance or provide relevant analytical information.

For example:

  • When creating a standing payment order or a new payment, the payment module should be able to visualize (by using the PFM Analysis & Forecasting module) what will be the impact on the customer’s budget and his "Free to Spend" amount.

  • When paying a bill, the PFM module should be able to show information like:

    • The most recent amount the customer paid for a bill for the same merchant

    • The year to date total of all bills paid to that merchant or in that category of expenses

    • A comparison with similar bills of a peer group to see if peers are paying less for similar bills (e.g. electricity, water, rent…​)

5.5. Pro-active Advise and Automated Actions

The ultimate goal of the PFM solution is to assist customers in managing their money. All above functionalities are reactive, i.e. the customer is initiating the request for information. Customers are of course also interested to receive pro-active advise in a push mode (predicting what the customer needs) and that certain routine banking operations are (semi-)automated based on the PFM data. Via a continuous analysis of the transactions occurring on your accounts, interesting insights can be gained, allowing to pro-actively warn the customer about issues or opportunities.

In this functionality, we identify 3 groups:

  • Push notifications to assist customers making informed financial decisions

  • Identify cross- and up-selling opportunities based on PFM data

  • Automated actions based on PFM triggers

5.5.1. Push notifications to assist customers

The data available in the PFM system should be leveraged to identify customer behavior patterns and push notifications (email, secure messages, SMS…​) to assist customers in their financial decisions.

A customer should be able to define his preferences, i.e. which notifications he wants to receive and via which medium (email, SMS…​).

Some examples of interesting notifications:

  • Notify about bill due dates

  • Notify when overdraft is being used

  • Notify when spending in category exceeds the budget plan

  • Notify when high spending in category, i.e. spending in expense category considerably larger than previous months.

  • Notify about suspicious activities (i.e. spending not matching spending pattern)

  • Notify when cash forecasts (i.e. including upcoming payments) predicts cash shortage

  • Notify when a large credit or debit payment is received

  • Notify when 2 very similar transactions are executed (warning for potentially duplicate transactions)

  • Notify when making a payment for an amount considerably different than similar payments in the past (potentially a sign of a wrong bill or error in typing in the bill amount)

  • Notify if a saving goal is at risk, due to insufficient savings this month

  • Notify if amount on current account is below or above certain threshold

  • Notify if payment just done on location (using GPS location of mobile), where recently credit fraud was identified

5.5.2. Identify cross- and up-selling opportunities

PFM allows to provide also event-based recommendations for cross- and upselling products. These sales opportunities can be both financial or third-party products and services.

Some examples:

  • When the cash flow forecast in PFM identifies there will be insufficient cash in the near future, either an overdraft or consumer credit could be sold.

  • A customer creating a saving goal to buy a new car could be offered products to achieve his goal sooner or a car insurance deal could be proposed.

  • If analysis of recent transactions identifies that a lot of home renovation expenses are done and the customer does not have a home renovation loan yet, such a loan could be proposed.

  • Based on the GPS positioning of the customer and analysis of his spending, relevant merchants can be proposed (e.g. merchant being customer of the bank) and potentially discounts could be offered.

  • If a recent acquisition or regular payment (e.g. electricity bill) is considerably more expensive than market standards, propose cheaper alternatives for the future.

  • Card-linked offers: target card-owners with specific offers, based on the rich customer preference information obtained via PFM.

5.5.3. Automated actions

The customer should have the possibility to define several automated actions, based on his budget plan.

Some examples:

  • Automatic saving (or investing in investment plan) of excess money on current account

  • Automatic transfer money from saving account to current account, when insufficient money on current account

  • If spending in certain budget categories is lower than the budget plan, the surplus could be automatically transferred to specific saving goals

  • Capping of payments and saving automatically difference between capped and actual payment amount on saving account

6. External Enablers to accelerate PFM services roll-out

In this article several drivers internal to the bank (increased revenues, increased customer satisfaction…​) have been described. Several external factors will however also accelerate the enablement of PFM services:

  • The PSD2 regulation in Europe: PSD2 enforces all European banks to open up their bank account information to third-party providers. This will considerably simplify banks to offer a PFM solution with a full 360° view, via account aggregation. Since this option will be open not only to banks, but also to FinTech companies approved as TPP, the competition in providing account aggregation services (and linked PFM services) will fiercen.

  • MiFID2 requires a more detailed questionnaire for determining the risk profile of the customer (when he wants to do investments). This information will have a strong overlap with info to be inputted by customers in a PFM tool. Synergies are therefore clearly present.

  • MiFID2 imposes to be fully transparent on the costs and taxes linked to financial transactions and to provide an annual report of all bank commissions and taxes paid by the customer. A PFM tool in which transactions are split in smaller (differently categorized) portions is ideal to visualize this information.

  • The increase of mobile payments and introduction of "Instant Payments" (payments with settlement in real time) will result in a further reduction of cash transactions. This means payments will be more and more digital, meaning the PFM tool will require less and less manual input of transactions.

  • Banks are more and more pushed to open up their banking services via API gateways to create an API ecosystem. This evolution is mainly driven by the success of FinTech companies (forcing banks to partner up rather than to compete with them), regulations like PSD2 and the general technological evolution from a SOA landscape (internal services) to an API (services both internally and externally available) landscape.


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