We should all be able to identify by now that the banking industry is changing, it’s modernising thanks in part to consumers wanting a more personalised experience.
Now, according to a new study by IDC, European consumers are starting to change their minds on personal finance management (PFM) solutions.
The technology has existed for years but has failed to gain any real market traction, whilst it’s had its supporters, people have been unwilling to adopt.
Currently only around 4% of people are using a PFM solution but around 40% are open to using it in the future. According to the report, more people prefer using PFM through the online channel than through mobile.
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The report said: “IDC Financial Insights believes consumers will generally acquiesce to the growth of PFM solutions and as PSD2 account aggregators come on stream. A mass move on the part of banks toward account aggregation will see existing mobile banking portals integrated with PFM concepts — this way, PFM might become part of the fabric of everyday banking.”
For banks to take capitalise on a move into the PFM space they will need to strike a balance between being useful to consumers, in terms of providing spending and saving analyses plus helpful insights, while being easy to set up, automated, and unobtrusive, according to the report.
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Senthil Ravindran, Head, FinTech Lab, Banking & Financial Services, Virtusa, said: “IDC is absolutely right and PSD2 is going to be a major wake-up call for the industry. This shows that customers want to take control of their finances but most PFM tools available now only provide basic budgeting functions. Designing a PFM is more than putting an Excel spreadsheet report into an app. Fortunately, the Holy Trinity of Open Banking, mobile devices and AI is set to radically advance the functionality of PFMs.
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“By putting customers best interests at heart and analysing their habits, behaviours, competencies and knowledge to build individually tailored financial targets, PFMs can put control back in the hands – or mobiles – of customers. They can provide round the clock advice on everything from investing to budget management, helping people manage their finances better.
“By using the data banks already hold, PFMs can help customers work towards a specific goal – be it a holiday in Barcelona or a deposit on a house. This research clearly shows that the demand is there and, if designed properly, PFM tools can be more than just a sales channel for banks, they can be a financial mentor.”
