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Is PFM a good thing?

PFM tools started out, you'll recall, as software packages like Intuit Quicken or Microsoft Money, but the latest buzz is around either bank-branded services or bank independent sites such as 

Back in the day, Microsoft Money was shipped on pretty much every Windows machine.  Interestingly, one or two people actually used it.  But not many, and that was sort of strange because all the research at the time suggested that one of the main reasons people bought a PC was to manage their money.  Whatever the reason, it's a great study in the difference between what people say and what people do.

It wasn't that there was a lack of competition.  In fact, some commentators contemporaneously suggested that the demise of desktop PFMs was brought on by ‘featuritis'.  Incredibly, Quicken introduced call and put option scenarios!  Whereas, received wisdom suggested what was actually needed was more simple ways of managing one's main income and expenditure.

Although Intuit continued with its desktop product, they hedged their bets in 2009 as well, dramatically buying for USD 170 million.           

And so began the next generation of solutions such as and a growth of in-house offerings such as Lloyd's Money Manager, PNC's Virtual Wallet and hybrids like

It's fair to say that a few lessons have been learnt about feature-richness, and certainly true that offering a decent user experience is seen as important.  And the in-house offerings are getting better.  Banks have clearly been spurred on to concoct similar offerings, if only motivated by the threat of disintermediation.

But is hasn't been plain sailing for the new kids either - a bunch of wannabes have crashed and burnt in this space - Rudder, Wesabe, Kublax etc.   At the same time, banks are currently investing heavily with no real certainty of the latent demand.  It's a bit like ‘Field of Dreams'.  Only arguably less entertaining.

Here's my niggling concern:  How many of us actually either want or are able to ‘manage our money'?  If the number of people who actually appreciate tools to budget, plan and analyse is quite small then is PFM really any good (for the majority)?

There is research to suggest we approach money in different ways.  At the low-income segment, it has been identified that some people are ‘budgeters', others are ‘jugglers'  (that is to say they lurch from one financial priority to the next).  Similar differences are apparent at other income segments.  Credit Agricole's successful and innovative online private bank promotes self-directed financial management at the top-end segment and bucks conventional wisdom that high earning, time-poor individuals would always opt for the traditional private banker approach.

Personally, I fall into the segment of individuals that give only sporadic and peripheral attention to finances until the major outlay such as buying a car or house looms.  I have an unscientifically-founded, but sneaking, suspicion this segment is pretty sizable.  It covers most of the people I know at least. Here's the rub - the new generation of PFM tools still require you to put quite a lot of effort in to get anything out.  And for that reason, ‘I'm out'. 

So in my opinion for PFM to ‘be a good thing' and succeed, they either need to be sure to appeal to a big enough target market of keen budgeteers or offer something pretty ‘auto-magical' that suits the rest of us.

I like the concept behind's Safe-to-Spend.  It takes a forward-looking perspective of your likely outflows to help you understand in one figure (your Safe-to-Spend balance) your ‘spending cushion'.  It certainly makes you think again about the notion of ‘Current' or ‘Actual' balance.  But expenditure is not always predictable and equally past trends not always representative of future flows.  So the auto-categorisation of income and expenditure, the analytics and the predictive science need to be pretty sturdy. 

Bottom-line?  I think there is mileage in tools that help us manage finances - as long as they don't assume we want to spend a lot of/any time doing it.





Comments: (3)

A Finextra member
A Finextra member 20 June, 2011, 17:47Be the first to give this comment the thumbs up 0 likes


I think PFM will be a force for good but as you say it has to be easy to use and set up. Yes and why not introduce something that's a bit fun as well !

My current favourites is Standard Chartered Breeze service. There are many others beginning to break the surface and my biggest complaint is that testing the solution before I move account would mean moving account to a non UK based operation.

I wonder when the UK monopoly banks with dinosaur systems will be able to catch up ? The point is if they cannot tell you on one system everything you might need will they ever be able to provide you with a single view of your own money ?

Gareth Jones
Gareth Jones - Ubiquiem - London 20 June, 2011, 22:25Be the first to give this comment the thumbs up 0 likes


I really really like (the idea of) Breeze too.  However, it doesn't seem to me to be PFM - or at least not traditional PFM. Just decent mobile banking. Although... maybe that it was is good about it (!)  Maybe PFM is about managing money on the move and managing money in privacy.  And is two (or more) separate things?

As far as mobile banking are concerned i think there are few who can touch Breeze for its usability and appeal.  It's a world leader in this respect for sure.  But I'm not sure it really helps budget or plan or manage

But Breeze seems to be aimed at the 'too cool for school' segment.  It's nice that we know who the 'coolest intern' in the world is and great they work for SC- but has it improved the service that long standing customers have received - I guess we'll wait for that one.  Gareth

A Finextra member
A Finextra member 22 June, 2011, 19:01Be the first to give this comment the thumbs up 0 likes



Ok so what is PFM ?


It can be many things but I want to look at it as a marketing tool first. The question I always ask of our customers is "How are you going to get someone to move (or open) their bank account with your bank".


Lets take University students. Some 481,854 students were given places to start at a UK university in September 2010.This was an increase of 5.5% on the year before, according to official figures from the university admissions service, UCAS.


By 2012 their need for good money management controls will increase significantly inline with their university debt burden.


There are no figures for how many of these students already have a bank account but the question every bank marketing director will be asking will be how do we snare them.


Free music downloads or maybe books?


How about a way to help them manage their money. Any Time Anywhere. Speaking from experience at this time last year we were bashing out excel spreadsheets to help our daughter manage her money. What we really wanted to show her was a way she could manage her own money. Easily. On the move. From anywhere. In real time .


Yes in real time . It is possible but very few UK banks can currently deliver this at the moment.


So its not so much what is PFM , as it will be different things for different people.


It will be and has to be how quickly the data can be captured and squirted to the device of choice.


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