How to get it right on PFM
Apps that help people take better control of their money could be a key strategy in helping banks better support their customers and could even be a game changer for those institutions that can get it right with the proposition.
While the health pandemic drove greater awareness and adoption of digital banking, prior to COVID, banks were already starting to build out their personal finance management propositions.
The Commonwealth Bank would be the major bank that has so far led on PFM, overhauling its CommBank app to provide a myriad of features from managing money to actively searching out benefits for its customers.
These features were key during the health pandemic with the bank providing COVID support through its app.
MyState Bank has also offered a similar proposition, revamping its app to offer financial wellness initiatives.
The date the bank has garnered strong support for the app. Up has also led on the financial management tool, consistently rolling out features that really support their customers to send and save.
In fact, Up has a highly engaged customers base, and is already testing solutions from its open APIs around money management.
For RFi Group deputy general manager Kate Wilson, if banks and businesses can get it right, PFM can be a game changer. “There is a real customer need for these tools,” Wilson said.
RFi Group has been tracking consumer awareness of PFM tools.
Latest data from RFi Group’s Australian Digital Banking Council revealed that 35 per cent of people did want the support of their bank in helping them manage their money.
A significant proportion of the 35 per cent wanted some form of PFM functionality, with this coming through more strongly among younger consumers in particular.
What would this PFM functionality look like?
For Wilson it was around spending tracking as well as insights into their spending and additional budgeting.
“People just wanted additional features to help them manage their money.
Given how new PFM is in the market and how few people have had exposure to these services, it is interesting that people are starting to ask for these tools directly from their bank,” Wilson said.
In particular, PFM has the greatest appeal among younger customers.
“Younger customers have always used debit cards. They are less likely to be regular users of cash and have always used digital banking.
“In comparison older generations have used cash and pen and paper to do their budgeting. My theory is that there is a generational difference in people asking for PFM.”
PFM tools can also support higher net promoter scores.
According to RFi Group research, some banks that have introduced PFM tools and features have seen their NPS scores increase.
“Offering the right features can have a positive impact on NPS.”
The full story is featured in the April edition of AB+F.