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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. ...

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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  • Full Name Full Name Comment goes here.
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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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  • interesting presentation, i would like to share this article about emilio botin, chairman of santander http://www.publico.es/agencias/efe/51705/emilio-botin-el-directivo-espanol-mejor-valorado-segun-encuesta
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  • - but banks are slowly taking over
  • Equal gender split

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

  • Personal Finance Management (PFM) is the future of online banking
    Georg Ludviksson
    Meniga Co-Founder and CEO
  • “PFM’s critically important, it’s a vision of the future of online banking”
    Emmett Higdon, Senior Analyst at Forrester Research
  • 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
  • What is PFM?
    +
    Personal Finance Software
    Web 2.0
    • Overview
    • Budgeting
    • Financial Planning
    • Follow-up
    • Education
    • Easy to use
    • Social networking
    • Rich Interface
    • Fun
    • Visual
    = Mass Appeal
  • The new generation of online PFM started in the USA
  • Mint.com launched in 2007and now has 4 million users
  • ... but banks are slowly taking over
  • 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
  • Europe had a slower start but is now also picking up steam in PFM
  • BBVA launched „Tu Cuentas“ in 2008
    PFM site separate from online banking
    Third of online banking users active
  • Islandsbanki launched Meniga in 2009
  • ING launched TIM in 2010
  • Independent PFM web sites exist in many European markets...
  • ...including Sweden...
  • ... but they have limited tractionbecause transactions have to be manually imported
  • 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
  • Meniga PFM Solution Live Demo
  • User adoption and feedback from Meniga‘s implementation in Iceland with Íslandsbanki
  • Íslandsbanki launched an ad campaign
  • Excellent Engagement Metrics
    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
  • User Age Distribution
  • Equal Gender Split
    52% Male
    48% Female
  • “A huge relief to have a good overview of my finances.”
    Woman in her 30s
  • “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
  • 82% are pleased or very pleased
    Neither pleased nor displeased
    Very pleased
    Pleased
    Very displeased
    Displeased
    Overall, how pleased or displeased
    are you with Meniga?
  • 88% say they will regularly use Meniga
    I wont use it again. Reason: “No support for my main credit card”
    Very likely
    Likely
    Neither likely nor unlikely
    Unlikely
    Very unlikely
    How likely or unlikely is it that you
    will regulary use Meniga in the future?
  • 66% say Meniga has helped them see where they can improve financially
    No: 34%
    Yes: 66%
    Has Meniga helped you see where you
    can improve in your household’s finances?
  • 41% say they have improved their spending behavior because of Meniga
    No: 59%
    Yes: 41%
    Has your spending behavior improved
    after you started using Meniga?
  • Why should retail banks care about PFM?
  • “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
  • 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
  • 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
  • 72% say Meniga increases their loyalty to their bank
    Strongly agree
    Agree
    Neither agree nor disagree
    Disagree
    Strongly disagree
    State how much you agree or disagree with the
    following statement: “My bank offering me free access
    To Menigaincreases my loyalty to the bank”.
  • “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
  • 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
  • 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
  • 89% say they‘d recommend Meniga
    Neither likely nor unlikely
    Very likely
    Likely
    Unlikely
    Very unlikely
    How likely or unlikely is it that you will
    recommend Meniga to your friends?
  • 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
  • “Personal Finance Management (PFM) functionality is the highest potential ROI project for retail financial institutions to implement in 2010.”
    Online Banking Report, May 2010
  • Offering PFM to your customers is an investment in your bank‘s future...
  • ... but deploying PFM doesn‘t have to be a long and difficult process
  • 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
  • Step 1
    Step 2
    PFM as part of online bank
    Stand-alone PFM
    • Re-skin Meniga to match bank‘s branding policy
    • Implement back-end integration to allow for secure flow of data (transactions)
    • Gradually increase integration with online bank
    • Move towards a seamless user experience
    Timeframe:
    Few months
    Timeframe: Variable
  • Meet us again at FinovateEurope in London on Feb 1st 2011