The adoption of Personal Finance Management (PFM) tools is widely reported as being subpar.

Most of the data on the subject is US-based so far. Analysts from Celent said some time ago that only 3.8% of all online banking users are active users of PFM solutions, the Federal Reserve said in a 2012 report that 21% of consumers currently use a PFM tool while Aite Group believed it's a tad higher at 27% and Javelin concurred with 21% using a mix and match of PFM tools, from traditional money management software or spreadsheets to online banking and third-party services.

There is little public data about the rest of the world's relationship with PFM today, largely because the deployment of related online tools, whether embedded into online banking or standalone, is in a more nascent stage and simply because of limited analyst coverage. However the glass-half-full consensus is that there is certainly room to grow PFM adoption everywhere.

Lipstick on a PFM

Let's save security concerns and the trust issue of using third-party services for another blog post and focus on the PFM solutions provided by banks for now. One of the key reasons cited for the lack of adoption is the absence of a common user experience with traditional online banking capabilities. Relegating PFM to another tab and failing to connect its capabilities to key sections of online banking like transaction details and statements clearly don't help. So usability and design tricks are called to the rescue to better connect the two. Excellent.

Other reasons include the need for banks to do a better job at marketing the PFM tools, with banners and splash pages on the public web site, proper education of both customers and staff and other multi-channel tactics to raise awareness of the new capabilities. Right on.

All good reasons but do these try to address the root cause?

Money Management for the Masses

PFM tools in most of their current incarnations are basically an online port of traditional money management tools like the venerable Quicken or Microsoft Money. This approach assumes that consumers want and even like to manage their money and allocate a significant amount of their spare time to keep track of their finances in great details. The truth is that generally, beyond money management hobbyists, they don't.

I would like to contend that an important way to increase adoption is to cater for the very large budget-averse population, for those who never cared about Quicken or Microsoft Money, for people who want to make sure their finances are on track, their bills paid and their savings in order with no effort, and certainly without a regular deep-dive into the tiniest of their expenses.

"Don't merely throw pie charts at us and don't ask us to set detailed budgets before we can get any value from the tool, try first to detect automatically things which are likely to be relevant to us based on our spending patterns and give us actionable recommendations or at least food for thoughts to help us improve our finances" shout the masses.

All in all, PFM functionality should simply get out of the way. It needs to truly blend with standard online banking capabilities to deliver automatically the right dose of clever alerts and financial advisory to users. Again, let's not start the discussion by asking consumers to work but let's assist proactively and educate softly instead.

What do you think? Do you feel that personal finance management should feature as an activity on its own in consumers' daily routine or get slightly more subtle and non-intrusive to attract more users and solve that adoption conundrum?