The Business Case For Personal Financial Management

Back in November 2006, a startup called Wesabe first showed the potential of online money management. Packaged personal financial management (PFM) software for PCs like Intuit's Quicken had existed for years, but Wesabe, Mint.com and a handful of other startups showed the value of using customer data, and community, to help people understand their finances better.

Since then, hundreds of banks, credit unions, wealth management firms, and other companies have launched a range of spending categorization, budgeting, peer group comparisons, and other money management features for their customers.* The leaders are increasingly making money management available in mobile and tablet apps, as well as on their websites. Fuelled by the poor state of many of the world's developed economies and growing use of digital channels, customer interest in online money management is substantial, as my colleague Reineke Reitsma wrote on her blog a few months ago.

Yet despite the growing number of firms that already offer money management, and the evident interest of some customers, many financial services eBusiness executives still question whether the business case adds up. Our new report on The Business Case For Personal Financial Management addresses that question. Here's what we found:

  • Online money management offers a wide range of benefits. Much like customer relationship management (CRM), online money management generates a series of benefits, rather than one big one. Those benefits fall into two categories: soft benefits, like customer advocacy, differentiation, and deeper customer insights, that are hard to quantify; and hard benefits like customer retention or increased cross-sales that can be directly quantified.
  • The business case adds up. Our report contains a model based on the estimated costs and likely benefits of launching online money management. The costs of developing or buying the software, integrating it into your existing systems, and deploying it across multiple touchpoints are substantial. But the returns can be substantial, too. Our model shows that the biggest returns come from cross-selling additional products, followed by reduced customer attrition and then cost savings from increased online banking use.
  • Everything depends on execution. Different firms have achieved quite different results. The returns you achieve from deploying online money management will depend on how well you execute. Put simply, returns rise and fall with adoption and use. Prioritize designing an easy user experience, marketing the benefits, and encouraging repeat use.

Forrester clients can read the full report and download the accompanying interactive spreadsheet here.

*Those firms include many leading banks, such as ANZ and Westpac in Australia; Bank of Montreal and Royal Bank of Canada in Canada; Boursorama and Fortuneo in France; Bank Hapoalim in Israel; ABN Amro, ING, and SNS Bank in the Netherlands; BNZ and Kiwibank in New Zealand; Skandiabanken in Norway and Sweden; Banc Sabadell, BBVA, and La Caixa in Spain; Barclaycard and Lloyds TSB in the UK; and Bank of America, PNC Bank, USAA, Wells Fargo, and dozens of credit unions in the United States.

PS It seems our blog platform and our website aren't integrating as smoothly as they should be. The other reports I was citing are: