Personal Finance Management (Part 1): What Consumers Really Want from PFM

Personal Finance Management (Part 1)
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Overview

Although the recent “Great Recession” has caused millions of Americans to tighten their belts financially, nearly one out of five consumers are financial sleepwalkers who do not monitor or manage their personal finances — more than double the rate in 2009. This response to financial stress is natural, but it reinforces the need for the financial services industry and technology vendors to develop online and mobile personal finance management (PFM) tools that can give Americans a sense of financial control and restore consumer confidence. Javelin identified and analyzed four types of money managers based on the way they monitor and manage their finances: paper‐and‐pen managers; online balance‐checkers ; desktop‐PFM users who use software like Intuit’s Quicken and Microsoft Excel; and web‐PFM users who use PFM tools at a bank, credit union or a personal finance website like Mint. So far, adoption of Web‐PFM has been limited, but that will change if financial institutions and technology vendors deliver PFM tools that 1) redefine online banking by installing PFM at the heart of the user experience; 2) consolidate all of a customer’s accounts, including those held at outside financial institutions; 3) serve up real‐time data; 4) automatically categorize spending and saving data; and 5) exploit the power of PFM on mobile devices.

Primary Questions:

  • Which consumers are hungriest for PFM tools?
  • What are the building blocks for constructing marketleading PFM capabilities?
  • How important is it for banks and credit unions to present a financial snapshot that includes data for accounts held at outside financial institutions?
  • Are consumers willing to provide login credentials and passwords in order to see all their financial accounts in one place?
  • Do consumers trust banks more than they trust personal finance websites to keep their login credentials safe?
  • What are specific ways that PFM tools can enhance revenue opportunities, lower operating costs or reduce identity‐fraud losses?
  • Why is PFM critical to a financial institution’s mobilebanking and payments strategy?

Methodology

This report is based mainly on data collected online from a random‐sample panel of 1,995 online consumers in August 2010. The survey targeted respondents based on proportions of gender, age and income representative of those of the general U.S. online population. Overall margin of sampling error is ±2.19% at the 95% confidence level.

This report also incorporates chronological data collected online from a random‐sample panel of 2,019 respondents in August 2009; the margin of sampling error is ±2.18 percentage points at the 95% confidence level.

Javelin collected identity fraud data from a survey using computer‐assisted telephone interviewing (CATI) via random‐digit dialing (RDD) from 5,000 respondents in November 2009. For questions answered by all 5,000 respondents, the maximum margin of sampling error is ± 1.4% at the 95% confidence level. For questions answered by all 703 identity fraud victims, the maximum margin of sampling error is ± 3.7% at the 95% confidence level. For questions answered by a proportion of all identity fraud victims, the maximum margin of sampling error varies and is greater than ± 3.7% at the 95% confidence level.

To develop a more detailed understanding of what consumers want in the way of PFM tools, Javelin identified four basic types of money managers based on the methods they use to monitor and manage their finances. They are defined in the following table.

Type of Money Manger Definition
Paper-and pen manaers Use pen‐and‐paper methods to manage their finances
Online balance-checkers Log in to online banking to check account balances
Desktop-PFM users Use personal finance software such Quicken or spreadsheet software such as Excel
Web-PFM users Use PFM tools offered by a bank, credit union or a personal finance website such as Mint

Companies Mentioned

Apple Jwaala
Bank of America Microsoft
Citibank Mint
FIS Online Resources
Fiserv Quicken
Geezeo Strands
Intuit Wells Fargo
Jack Henry & Associates Yodlee
JP Morgan Chase


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