Banks Can Close Gap Between Customers Who Want PFM and Those Who Use It, Fiserv Says

There's a considerable gap between online banking users who show interest in personal financial management (PFM) tools and online banking users who actually use personal financial management tools, according to a survey of 3,000 online banking users conducted last winter by Fiserv.

About 40 percent of consumers surveyed in December 2009 said PFM serves would be beneficial to managing their finances. Of the 3,000 online banking customers surveyed, however, only 15 percent said they had used a PFM service within the last 90 days. Fiserv, a financial and insurance information management systems and services provider, provides PFM, payments and online banking tools to banks through its Corillian Online product.

What the disparity between those who think PFM tools are useful and those who actually use PFM tools means, says Geoff Knapp, Fiserv vice president, Online Banking and Consumer Insights, "is that there's no common place for consumers to get these tools."

"It's not really widely offered by the financial institutions," Knapp adds. "Some of the larger financial institutions offer some level of financial management through their banking website, so some consumers can use them if they can find them."

Meanwhile third party PFM services, such as those offered by Quicken and Mint.com, have certainly done more to market their services and ability to aggregate data to multiple accounts, Knapp says. But, he added, despite the buzz, usage of PFM tools offered directly through a consumer's bank still dominates.

"What that says to me is the financial institutions are the obvious home for these services," Knapp says.

Fiserv's survey showed consumers' primary interest in PFM tools was for budgeting (56 percent), to categorize spending (43 percent) and to chart spending (41 percent). A lower number of consumers saw PFM tools as a place to track multiple accounts across different financial institutions (33 percent) and to forecast spending (24 percent).

Knapp said the reason Fiserv only surveyed current online banking users was to gauge interest among those who are already inclined to bank over the Internet.

"In particular we were interested in a survey of folks who had some level of online banking relationship and what their preferences were as they related to these services," Knapp adds

Simply, if a customer is not comfortable with online banking, they might not be likely to immediately jump into the world of personal financial management on the web.

"We were really trying to draw the connection between online banking consumers and their preferences," Knapp says.

An area the survey found PFM tools could be particular in engaging customer interaction was among the Gen Y crowd, those who have grown up with computers and web interaction as an everyday part of life. As that group continues to form financial relationships, Knapp says, they are most inclined to use services like online bill pay and PFM.

"I think if the banks don't offer these types of services, that generation in particular would be looking for some non-bank alternative for these services," Knapp says.

Knapp believes banks who currently offer PFM tools need to do a better job promoting them and making them easy for customers to find. While general interest in online personal financial management is there, more attention could be focused on educating customers about the benefits of PFM and making it more accessible.

"In many ways the jury is still out," Knapp says. "The current market today is pretty fragmented in this usage. If you look at the 15 percent of online banking users who use some PFM services, it's a pretty narrow swath."

He adds that the largest PFM provider, Quicken, has less than 30 percent of the current market. There's an opportunity for banks to capture a larger part of the emerging market, and get the attention of younger customers along the way.

"Banks are in a prime position to take advantage of that," Knapp says.