Personal Finance Management (PFM) is the future of online banking

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More and more US and European banks are offering PFM solutions in their online banks to strengthen the relationships with their customers and compete with independent PFM web sites such as Mint.com. Customers love PFM but what's in it for the banks? Georg Ludviksson , CEO of Meniga describes the experiences of Meniga's partners and other banks of offering PFM solutions through their online banks.
Presentation held at the Bank 2.0 conference in Stockholm on November 16th 2010. See www.meniga.com and www.bank20.se

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  • These features are available since decades in Intuit Quicken and Microsoft Money, why not use them? Because they cost $60-80, and you have to export your transactional data from the online bank and import it to this desktop softwares. Two tasks that block customers from using such kind of software.
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  • - but banks are slowly taking over
  • Equal gender split
  • Personal Finance Management (PFM) is the future of online banking

    1. 1. Personal Finance Management (PFM) is the future of online banking Georg Ludviksson Meniga Co-Founder and CEO
    2. 2. “PFM’s critically important, it’s a vision of the future of online banking” Emmett Higdon, Senior Analyst at Forrester Research
    3. 3. Venture-funded Nordic software company Born from the Icelandic financial crisis Focus on PFM Solutions for Retail Banks Operating PFM with retail banks since 2009
    4. 4. What is PFM? + • Overview • Budgeting • Financial Planning • Follow-up • Education • Easy to use • Social networking • Rich Interface • Fun • Visual Personal Finance Software Web 2.0 = Mass Appeal
    5. 5. The new generation of online PFM started in the USA
    6. 6. Mint.com launched in 2007 and now has 4 million users
    7. 7. ... but banks are slowly taking over
    8. 8. One in five US banks now offer PFM Aite Group: PFM: A platform for customer engagement, February 2010 Over one third of Americans now use online banking tools to manage their finances – a 27% increase since 2009 According to Intuit Financial Services: http://www.ifs.intuit.com/ 60% more people use PFM provided by banks than independent PFM web sites Online Banking Report, May 2010 Consumers are twice as likely to trust a bank over a PFM web start-up (71% vs 35%) Javelin Strategy report on PFM Tools
    9. 9. Europe had a slower start but is now also picking up steam in PFM
    10. 10. BBVA launched „Tu Cuentas“ in 2008 PFM site separate from online banking Third of online banking users active
    11. 11. Islandsbanki launched Meniga in 2009
    12. 12. ING launched TIM in 2010
    13. 13. Independent PFM web sites exist in many European markets...
    14. 14. ...including Sweden...
    15. 15. ... but they have limited traction because transactions have to be manually imported
    16. 16. Only a handful of banks in Europe offer comprehensive PFM to their customers ...but many are in the works ...and most are reviewing their strategies PFM Consumer awareness is still much lower in Europe than in the USA Independent PFM sites exist in many European markets but are struggling
    17. 17. Meniga PFM Solution Live Demo
    18. 18. User adoption and feedback from Meniga‘s implementation in Iceland with Íslandsbanki
    19. 19. Íslandsbanki launched an ad campaign
    20. 20. Over 20% of the bank‘s online users signed up within 6 months Over 75% of new users login again within 2 weeks Over 25% of users visit more than 5 times in the first month and become highly active Average 12 min and 35 pageviews per visit Excellent Engagement Metrics
    21. 21. User Age Distribution 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Younger than 25 25-34 35-44 45-59 60 and older
    22. 22. Equal Gender Split 52% Male 48% Female
    23. 23. “A huge relief to have a good overview of my finances.” Woman in her 30s
    24. 24. “This is the most user-friendly budgeting tool that I have ever known. Managing my money is really simple and I always have an up-to-date picture of where my money is going. I have improved my spending habits and am therefore able to pay down debt faster.” Man in his 60s
    25. 25. 82% are pleased or very pleased 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Mjög ánægð(ur) Frekar ánægð(ur) Hvorki ánægð(ur) né óánægð(ur) Frekar óánægð(ur) Mjög óánægð(ur)Very pleased Pleased Neither pleased nor displeased Displeased Very displeased Overall, how pleased or displeased are you with Meniga?
    26. 26. 88% say they will regularly use Meniga How likely or unlikely is it that you will regulary use Meniga in the future? 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Mjög líklegt Frekar líklegt Hvorki líklegt né ólíklegt Frekar ólíklegt Mjög ólíklegt Ég mun ekki nota Meniga framar. Ástæða: Very likely Likely Neither likely nor unlikely Unlikely Very unlikely I wont use it again. Reason: “No support for my main credit card”
    27. 27. 66% say Meniga has helped them see where they can improve financially Has Meniga helped you see where you can improve in your household’s finances? No: 34% Yes: 66%
    28. 28. 41% say they have improved their spending behavior because of Meniga Has your spending behavior improved after you started using Meniga? No: 59% Yes: 41%
    29. 29. Why should retail banks care about PFM?
    30. 30. “Javelin data illustrates that financial institutions that install compelling personal finance management tools stand to reap the benefits of increased customer loyalty, higher usage, lower costs and added revenue.” Javelin Strategy & Research, September 2009
    31. 31. PFM strengthens your brand 20-40% of your customers will love PFM PFM is socially responsible–it‘s the right thing to do 80% of Meniga‘s users (20% of bank‘s customers) say PFM is an important and valuable service Stronger effect for an early-mover
    32. 32. PFM vastly Increases Customer Retention Some banks have seen a reduction of up to 50% in accounts closed after introducing PFM OnlineBankingReview, July 2010 PFM users build a history they don‘t want to lose We live in a time where loyalty is on the decline Customers who use the PFM tools are significantly more profitable OnlineBankingReview, July 2010
    33. 33. 72% say Meniga increases their loyalty to their bank State how much you agree or disagree with the following statement: “My bank offering me free access To Meniga increases my loyalty to the bank”. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% Mjög sammála Sammála Hvorki sammála né ósammála Ósammála Mjög ósammálaStrongly agree Agree Neither agree nor disagree Disagree Strongly disagree
    34. 34. “PFM can be an even more powerful retention technique than other online features, even bill payment. Why? The average user with a dozen or so payees could move their bill payment account to another bank with an hour or two of work. But with current practices, it’s much more difficult, if not impossible, to move transaction history to another bank.” Javelin Strategy & Research, September 2009
    35. 35. Customer Engagement and Cross-Selling More and more people prefer never to visit branches PFM is a major new low-cost channel for engaging with your customers PFM usage says a lot about users‘ financial situation and brings unique data to target marketing efforts PFM is a natural channel for recommending products and services
    36. 36. PFM helps you Acquire Customers Stand-alone PFM attracts new customers PFM can increase the effectiveness of other acquisition methods, such as credit card offers PFM users use your credit and debit cards more - 20% of Meniga users have increased use of cards issued by their bank since signing up
    37. 37. 89% say they‘d recommend Meniga How likely or unlikely is it that you will recommend Meniga to your friends? 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Mjög líklegt Frekar líklegt Hvorki líklegt né ólíklegt Frekar ólíklegt Mjög ólíklegtVery likely Likely Neither likely nor unlikely Unlikely Very unlikely
    38. 38. PFM increases Efficiency PFM is a big step towards the „virtual branch“ PFM partly automates the advice customers currently seek in branches. PFM should be part of a long-term strategy to stay close to your customers
    39. 39. “Personal Finance Management (PFM) functionality is the highest potential ROI project for retail financial institutions to implement in 2010.” Online Banking Report, May 2010
    40. 40. Offering PFM to your customers is an investment in your bank‘s future...
    41. 41. ... but deploying PFM doesn‘t have to be a long and difficult process
    42. 42. Meniga PFM Solution Deployment Stand-alone web application software On-premise deployment or SaaS White-label offering Flexible and straight-forward integration options for any bank‘s technical platform
    43. 43. Step 1 Step 2 • Re-skin Meniga to match bank‘s branding policy • Implement back-end integration to allow for secure flow of data (transactions) Timeframe: Few months • Gradually increase integration with online bank • Move towards a seamless user experience Timeframe: Variable Stand-alone PFM PFM as part of online bank
    44. 44. Meet us again at FinovateEurope in London on Feb 1st 2011

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