Personal Financial Management (PFM): Connecting the Dots


We’d like to point out what might be a fruitful intersection of trends in banking services.

The first trend is the addition of PFM tools to many leading banks’ online and mobile offerings. These tools typically marry account aggregation with budgeting and reporting to help users monitor and manage their financial lives.

The second trend is the move toward greater personalization in the manufacturing of financial products. Here we are thinking of credit cards that offer customers flexible parameters balancing interest rates, bonus rates and card fees, or bank accounts that customers design that provide bespoke levels of targeted returns, allocations and timing.

At the moment, most PFM tools are agnostic regarding product. They factor in existing product balances and growth rates and help with managing budgets and calculating goal states. What they do not do is identify optimal product solutions to reach these goals.

Here is where personalization comes in. Banks could connect PFM tools to their internal ability to build products. In doing so they could offer PFM users targeted offerings that optimize goal-based strategies. In a way this is like Amazon taking the time to figure out what the customer needs or wants and recommending options. Only in this case the bank goes one step further by both manufacturing and distributing the product.

If implemented well, this approach could help the bank build a closer, more personal and differentiated relationship, while making the client’s financial management chore easier and more rewarding.