PFM is Good for You. So Why Don’t More People Use It?

December 7, 2012

Financial institutions sure are excited to offer personal financial management (PFM) software to customers these days. The problem is, customers are slow to take them up on it.

My Community Federal Credit Union, a Midlands, Texas-based credit union with 23,000 members, recently launched a PFM product from MoneyDesktop, which has picked up several awards for its innovative interface and “BubbleBudgets,” and is looking at ways to get customers to use it.

Ryan Caldwell, MoneyDesktop’s chief executive, says that PFMs are misunderstood. “We need to stop using PFM as a term to mean pie charts and bar graphs,” Caldwell argues. “PFM is anything that helps someone manage their personal finances.”

So if financial institutions are sold on PFM — and PFM is good for you (like broccoli) — why aren’t customers rushing to adopt it?

Aite senior analyst Ron Shevlin points out two major factors that slow uptake: First, the lack of involvement in management of household funds by bank customers, and, second, few bank customers want their banks involved in helping manage their spending — just 13% of those surveyed in an Aite report.

Caldwell disagrees.

When banks understand what he calls a“Google level of service,” in which expectations are wildly exceeded, the relationship between banks and customers will be transformed — and customers will want banks more involved in managing their financial lives.

Shevlin and Caldwell agree on the need for guidance. Shevlin has written that PFMs need to be integrated with tools that guide and advise customers, and MoneyDesktop now includes a GuideMe application within its PFM product.

Another factor that should help PFM adoption for My Community members using MoneyDesktop is consistency across channels. MoneyDesktop reports that 60% of online banking users at some of its clients are using PFM. As more transactions move to mobile, and the mobile experience on tablet and smartphone closely resembles what online banking users see on their desktop computers, mobile PFM adoption should rise. Caldwell also stressed that PFM should be gamelike in that the software sets goals and you can see yourself moving closer (or not) to achieving those goals.

My Community is also advertising in its branches and holding a “MoneyDesktop Week” to alert members to its new PFM product.

Lezlie Veach, My Community director of training and development, is optimistic that once users get the hang of PFM, adoption and continued usage will follow. There are, after all, plenty of ways to dress up broccoli.

Update: This story was corrected to report that 60% of MoneyDesktop users at some of its clients use PFM, not 60% across the board, as was previously stated.

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8 Responses to PFM is Good for You. So Why Don’t More People Use It?

  1. Joey on December 7, 2012 at 10:44 am

    60% of Online Bankers are using PFM? If true, that would be ground breaking because every independent study out there places the number of active PFM users at under 10% – well under 10%. I’ve spoken with people from Money Desktop and the highest usage rate I have heard from them is 20%. The Aite survey cited above found that only 13% of people want banks involved in helping them manage their spending. That is a big disparity.

  2. Philip Ryan on December 7, 2012 at 12:14 pm

    Joey — Thanks. 60% of users — at SOME of MoneyDesktop’s clients, are using PFM. The story has been corrected to reflect this.

  3. Lisa Kuhn Phillips on December 7, 2012 at 6:01 pm

    PFM …….hmmmmm. why don’t people embrace and use it?
    1. Name. Do everyday people know what Personal Financial Management means? Let alone PFM. Make it easier to relate to (and want to try). Think 20something, 40something. tweensomething. M&M anyone? especially the green ones.

    2. Accessibility and Ease of Use. No availability where most house their spend, save and spot funds. And wait a minute…How many everyday people would try it out and form this healthy hAPPit? From what I’ve seen, no FI has cracked the code yet on how to effectively roll it out (but I am watching a smaller Texas CU and waiting to hear their results)…so much “BIG DATA” that could be effectively mined for quick wins and gain momentum, so much “SOCIAL INTERACTIVITY” that could be done to pull people in to try it. (A sidenote: I’ve seen MoneyDesktop’s demo and I wish I could have gotten it direct, so I’ll wait patiently…or maybe not.)

    3. Human Apathy & Unwillingness to try, seek help, get active. I like hot fudge Sundaes. I like broccoli too. Just can’t do it everyday. I know my limits….on food, but money….People need to understand this tool doesn’t require a whole lot of effort to start, just takes curiosity and commitment to try. They will get their own “aha” results to digest. Spend patterns can be painfully bloated, spot me/lend balances are typically too fat, and savings habits can be far too lean. But it is the first step to better awareness and a better balanced way of life. Choice is theirs.

    So how will FIs incent people to try it…. hmmm. see #2 on effective roll out, then add member experience shares, real successtories, contests for save/spend/borrow (think contests, you “gamers”), complimentary products/services to keep the habits healthy intact, and feed that socially connected pr machine too. relentlessly. purposefully.
    Then everyday people will start to realize that bacon (in moderation,sometimes lean) can be made without too much mess when they fry off the fat, and still enjoy a healthy taste of life.
    Because PFM is not a task, it’s a lifestyle.

  4. Joey on December 10, 2012 at 9:56 am

    Thanks Philip – I wasn’t trying to call out typos – just interested in what was behind the numbers. Thanks for clearing it up.

  5. Philip Ryan on December 10, 2012 at 11:09 am

    Thank you, Joey. Your point was a good one! Thanks for reading.

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