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Traditional PFM Is Dead. Welcome to the New World of Digital Money Management


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There is a fundamental shift occurring due to digital disruption in the financial services industry. Large banks are spending upwards of $500 million a year on mobile alone, global fintech investment grew 201% between 2013 and 2014 and up to half of the world’s banks will disappear through the cracks caused by digital.

Accenture believes with all of these changes, combined with deleveraging and squeezed margins, 30 percent of traditional banking revenues will be at risk by 2020. Now the only way for financial institutions to grow is to increase share of wallet by providing extraordinary value to customers and beating the competition.

Published in: Economy & Finance
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Traditional PFM Is Dead. Welcome to the New World of Digital Money Management

  1. 1. TRADITIONALTRADITIONAL PFM IS DEADPFM IS DEAD Welcome to the New World of Digital Money Management
  2. 2. You’ve seen theYou’ve seen the money that financialmoney that financial institutions areinstitutions are investing in digital.investing in digital.
  3. 3. Bank of America CEO said they spend $500 million per year on their mobile online platform and will continue to invest at that rate. Brian Moynihan
  4. 4. You know what’sYou know what’s happening in Siliconhappening in Silicon Valley and LondonValley and London right now.right now.
  5. 5. “Global fintech investment jumped .” - CB INSIGHTS & ACCENTURE 201% between 2013 and 2014
  6. 6. And you know thatAnd you know that banking models arebanking models are fundamentallyfundamentally changing.changing.
  7. 7. “By 2020, more than 30 percent of banking revenues could be at risk due to new competitors and trends.” - ACCENTURE
  8. 8. Financial institutionsFinancial institutions need to get ahead ofneed to get ahead of these changes bythese changes by empowering theirempowering their account holders.account holders.
  9. 9. “We need to reimagine how banks can truly enrich customers’ lives.” - BRADLEY LEIMER, HEAD OF INNOVATION, SANTANDER BANK U.S.
  10. 10. Banks and creditBanks and credit unions are recognizingunions are recognizing the importancethe importance of financialof financial empowerment.empowerment.
  11. 11. On a macro level, America needs help. Total student loan debt is now worth over $1 trillion Healthcare costs are soaring 62% of Americans do not have an emergency fund to cover even minor calamities
  12. 12. Americans are trying toAmericans are trying to manage their finances,manage their finances, but they're not usingbut they're not using the best methods.the best methods.
  13. 13. 82% of consumers keep track of their finances in some way, but over half do it through pen and paper (36%) or in their head (18%)!
  14. 14. Financial institutionsFinancial institutions need to be at the heartneed to be at the heart of helping consumersof helping consumers manage their financialmanage their financial lives better.lives better.
  15. 15. This is the futureThis is the future banking model!banking model!
  16. 16. “If you provide account holders with insight, recommendations, and advice, you build trust.” -MARK SCHWANHAUSSER, DIRECTOR OF OMNICHANNEL FINANCIAL SERVICES, JAVELIN STRATEGY & RESEARCH
  17. 17. Some financialSome financial institutions say, “butinstitutions say, “but we’ve tried PFM!”we’ve tried PFM!”
  18. 18. Traditional PFM hasn’t been effective because the experience is broken. Here’s why…
  19. 19. First of all,First of all, traditional PFM hastraditional PFM has been hidden away,been hidden away, deep into a tab.deep into a tab. That means account holders can’t find it!
  20. 20. Secondly, it reliesSecondly, it relies on single-sourceon single-source aggregation.aggregation.
  21. 21. This means that if the single connection to the data provider breaks, the account holder must wait days, weeks, or even months for their account and transactions to update!
  22. 22. Third, data isThird, data is ineffectively cleansed.ineffectively cleansed.
  23. 23. Most transaction feeds typically consist of a messy string of random-looking characters:
  24. 24. COSTCxx 04ROCHESTER XXX726 XXX-XXX-1189 XXX027
  25. 25. What is an account holder supposed to do with that mess?
  26. 26. Fourth,Fourth, transactions aretransactions are ineffectivelyineffectively categorized.categorized.
  27. 27. If you’ve ever used standard PFM solutions on the web, you know the pain of poor categorization.
  28. 28. Here is how two well known traditional PFM providers perform:
  29. 29. Fifth, the user hasFifth, the user has to do too muchto do too much work themselves.
  30. 30. If users have to set their own budget amounts or do multiple calculations to see how their finances are tracking for the month, they are not going to use that PFM product.
  31. 31. “For the most part, a person’s objective in decision making is to arrive at the best possible decision outcome with the least possible effort.” -COLLEEN ROLLER, VP OF USABILITY ENGINEERING / DECISION ARCHITECTURE, BANK OF AMERICA
  32. 32. Lastly, PFM has failedLastly, PFM has failed because of unimaginativebecause of unimaginative user experience.user experience.
  33. 33. “Most financial service UIs are based on an accounting paradigm, which is not surprising since that is how we are all trained to think about our finances.” -MOHAMMAD KHALIL, HEAD OF PRODUCT, DATA & MARKETING, MOVEN
  34. 34. So how is digitalSo how is digital money managementmoney management (DMM) different?(DMM) different?
  35. 35. “Over time, we believe money management will become not just a feature of digital banking but digital banking itself.” -FORRESTER RESEARCH
  36. 36. According to Mapa research, many PFM solutions globally are similar. In the examples that stood out, what was most distinctive was the ability to facilitate integration and increase both intuition and engagement.
  37. 37. With us so far? ;) Here’sWith us so far? ;) Here’s what account holderswhat account holders are looking for in DMM.are looking for in DMM.
  38. 38. A simple, personal and convenient experience that is secure and works A way to monitor all accounts in one place
  39. 39. Anywhere, anytime access View-it-and-do-it functionality Predictive and advice-driven data
  40. 40. DMM best practice #1:DMM best practice #1: A simple, personalA simple, personal and convenientand convenient experience that isexperience that is secure and workssecure and works
  41. 41. “Our emphasis has been rethinking financial service UIs to accommodate new paradigms that are eerily familiar. These paradigms attempt to simplify complex data or processes into highly consumable interactions that are intuitive to the user.” -MOHAMMAD KHALIL, THE HEAD OF PRODUCT, DATA & MARKETING AT MOVEN
  42. 42. DMM best practice #2:DMM best practice #2: A way to monitor allA way to monitor all accounts in one placeaccounts in one place
  43. 43. Celent Research found that 75 percent of account holders said that the ability to view all their finances in one place was “highly valuable.”
  44. 44. DMM best practice #3:DMM best practice #3: Anywhere, anytimeAnywhere, anytime accessaccess
  45. 45. With smartphones enabling on-the-go services, consumers have an always- on mentality.
  46. 46. DMM best practice #4:DMM best practice #4: View-it-and-do-itView-it-and-do-it functionalityfunctionality
  47. 47. Consumers want clear, concise insights where they can see how their finances are tracking and then easily be able to take action from it.
  48. 48. -RICK CLAYPOOLE, DIRECTOR, RETAIL PRODUCT MANAGEMENT AND MARKETING AT CADENCE BANK "It has to be a very elegant solution that makes it very easy for clients to get smart about their financial lives."
  49. 49. DMM best practice #5:DMM best practice #5: Shift from historical toShift from historical to predictive and advice-predictive and advice- driven datadriven data
  50. 50. “Banks traditionally provide historic data, such as last month’s bank statement. We on the other hand will use forward-looking data, such as next month’s bank statement.” -ANTHONY THOMSON, THE FOUNDER AND CHAIRMAN OF ATOM BANK
  51. 51. Now that you know whatNow that you know what a great DMM experiencea great DMM experience looks like, it’s time tolooks like, it’s time to understand how to getunderstand how to get the most out of it!the most out of it!
  52. 52. 4 steps to DMM success: Tighter integration Ongoing staff training Continuous feedback Better marketing and education
  53. 53. DMM success tip #1:DMM success tip #1: Tighter integration ofTighter integration of DMM into homepageDMM into homepage and out of a tab leadsand out of a tab leads to higher engagementto higher engagement
  54. 54. MACU Case Study: 40% adoption: After switching from PFM to DMM, adoption skyrocketed. 2x external accounts added daily: Once digital money management was integrated into the homepage, the number of external accounts added daily more than doubled.
  55. 55. DMM success tip #2:DMM success tip #2: Better marketingBetter marketing and educationand education
  56. 56. “The marketing materials were crucial in making Clarity [the name they gave their DMM white-label product] part of our brand... it significantly helped our adoption rate and increased word of mouth.” -RACHAEL SCHWARTZ, ELECTRONIC MARKETING SPECIALIST OF FARMERS BANK & TRUST
  57. 57. Created an advertising campaign through various marketing channels, including in the sidebar next to the customers' transactions Used instructional videos to explain the product's benefits In order to increase adoption, Farmers Bank & Trust
  58. 58. Integrated the product into online banking, making the enrollment process easy Helped users auto-populate their budgets Created iPad prize draws to encourage users to log in and use it
  59. 59. DMM success tip #3:DMM success tip #3: Ongoing staff trainingOngoing staff training
  60. 60. “The most effective training inspires employees to use the money management solution for themselves.” -ERIN CALDWELL, TRAINING DIRECTOR, MX
  61. 61. DMM success tip #4:DMM success tip #4: Continuous feedbackContinuous feedback
  62. 62. “Société Générale in France ... not only solicits ideas from customers but also asks for their feedback on new developments and asks them to vote to prioritize different improvements.” -FORRESTER RESEARCH
  63. 63. And finally… howAnd finally… how successful hassuccessful has DMM been?DMM been? Check out the andMACU case study here the Insight and Target case study here.
  64. 64. Empowering your account holders' financial lives through digital money management Learn more at Share