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The real reasons why banks are adopting PFM

The number of banks adopting Personal Financial Management (PFM) has more than doubled in the last 3 years.  In my earlier blog post, The truth about PFM, I presented the evolution and trends in the PFM space. But why do banks adopt PFM? What are their true motives and justifications in choosing PFM? 

We conducted a study of a large number of banks who have adopted PFM, and the conclusion is that they adopt for the following three reasons:

1. Banks want to defend their market position

  • Banks see PFM as a tool to differentiate their brand and create a new valuable service for their customers.
  • To stop third party PFM providers such as from stealing their customer interactions.
  • To catch up with competitor banks who have already adopted PFM.

2. Banks want to increase customer satisfaction, to create loyalty and retention

  • To give customers convenience, control, simplicity and organization.
  • To help customers to set and achieve their personal goals.
  • To enable customers to have full transparency over their income and spending and independently manage their finances.
  • To give them the feeling of control. Since the financial crisis, customer demand for personal finance tools has increased – as consumers want greater control.
  • To make banking as simple as possible and make people more aware of what actually happens with their money.

3. Banks see PFM as a strategic tool for revenue generation

  • PFM creates an enormous amount of valuable customer data. This creates cross- and up-sell opportunities.
  • To help the marketing department to have closer ties with the banks’ customers and gain more insight into customer needs and wants.
  • Migrate financial advice out of branches and into the online channel.
  • Include Savings and Loans business units in online banking – enabling consumers to apply for new financial products online.


We found that banks all agree that PFM offers new value added services which help to make their online banking propositions more attractive. However, there is skepticism within the banks about the Return on Investment of PFM, and how that is quantified. This is where more work is needed from banks and vendors, working in tandem.

PFM is still in its infancy and as technologies mature – as gadgets such as Google Glass bring PFM into the everyday – I believe it is set to become a lucrative data source and revenue generator for banks. What do you think?


Comments: (2)

A Finextra member
A Finextra member 22 September, 2014, 17:10Be the first to give this comment the thumbs up 0 likes

As rightly pointed out, PFM is for those who want to have a sense of greater control. However, there is a significant percentage of people who like to appoint financial planners so as to save themselves the worry of tracking their investments. Furthermore, until the banks' provide a better interface or improved functionality than existing PFM vendors, PFM would not turn out to be a prifatable endeavor for banks

A Finextra member
A Finextra member 23 September, 2014, 07:361 like 1 like

Thanks for this comment Anupam. Indeed, PFM has to meet the needs of different segments in order to foster high user adoption. However, there are also other reasons why PFM implementations disappoint. To name some: wrong implementation strategies, not being “holistic” enough, not “actionable” and alike.

About the issue regarding UI and UX – often it is not to blame the vendors. In my experience I have seen very often banks making PFM fit into their needs (enforcing their existing UI and UX). Banks neglect the fact that their customers are the same people who consume large number of apps and 3rd party software every day which offer great usability and experience.  


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