There is a spirited conversation occurring in a Personal Finance Management subgroup on LinkedIn, spurred by Mary Wisniewski’s column in American Banker about how “PFM Defies Definition.” The heart of the discussion points to the growing awareness that PFM must break free from the 1980s definition of budgeting and investment tools for do-it-yourself PC enthusiasts with a masochistic delight for details, tracking, and quantitative analysis.

As I interjected in the LinkedIn conversation, the financial services industry makes a number of fundamental mistakes in their thinking and approach to PFM. Here are four that are top of mind in light of my latest PFM report, which is on track to be released to subscribers Feb. 21 and to the public Feb. 27:

  1. It is a fundamental error to generalize thatconsumers don't care about their money. They do. A lot. Especially in tight times like we're in now.Some banking strategists mistakenly draw an analogy between bad financial fitness and obesity or smoking, noting that consumers talk a lot about wanting to change but fail to take action to alter habits.
  2. It is a mistake to frame PFM as tools that should be designed to change habits. That type of thinking will cripple your chances of satisfying a mass audience and attaining the potential sustainable return on investment. Instead, the goal should be to identify ways to help most consumers save or make smarter decisions in everyday financial decisions. The majority of consumers will be delighted if you help them save money and stretch dollars. Far fewer will make the metaphorical to changing their diet and regularly hitting the gym.
  3. You limit yourself -- and your ROI -- if you limit your PFM vision to helping consumers save on banking products and transactions. You also can help consumers save as they shop, pay, etc. Banks, credit unions, PFM developers, merchants, billers, mobile carriers, health insurers and so forth can -- and should -- be looking for opportunities to develop targeted, specialized PFM.
  4. It's a complete blunder if you aren't developing a mobile PFM strategy. That's where PFM has its richest potential to reach the widest audience on an everyday basis. If you are interested in joining or monitoring the PFM conversation, look for the “Personal Financial Management (PFM) subgroup in LinkedIn. It is a spinoff from the group called “Internet & Mobile Banking Professions (online, e-banking) group.”

About Mark Schwanhausser

Mark strategizes how financial institutions can track and serve customers across the channels they use, and provide a consistent, integrated brand and user experience. Mark helps banks and credit unions profitably enable customers to monitor and manage their money more intelligently through technology such as online banking, mobile banking, personal financial management, financial alerts, and technologies on the horizon. 

Mark led the development of Javelin’s Digital Banking Maturity Path, a strategic framework for assessing a financial institution’s ability to deliver advice in digital channels, and the Financial Journey Model, which builds digital banking on a foundation of time-tested personal finance principles. He has also mapped out strategies to upgrade online banking, digital account opening, and financial alerts in a mobile-first era. 

Before joining Javelin, Mark was a personal finance reporter for the San Jose Mercury News. He covered money and emerging trends in financial services and payments technology.

Mark has a bachelor’s degree in journalism from the University of Missouri at Columbia and attended Antioch College.

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