Consumers’ digital experiences, including banking, are becoming more and more visual. Within the retail banking sector much is still to be done.
Most importantly banks should not judge Personal Finance Management (PFM) tools as isolated investments: rather a piece of the puzzle to build a great overall digital customer experience.
In this article I will talk about how PFM has developed within retail banking (from a customer perspective) over the years, how we see things evolving and what banks can learn from new players.
PFM developments in short over the last three years:
- PFM tools were primarily introduced within internet banking. Mobile developments were close to non-existent among banks, and tablet banking did not even exist!
- The tools implemented were pure add-ons to existing platforms and rarely fitted in with the overall experience; they also lacked engagement.
- Much of the debate back then was centered on monetising the cost of the deployment.
- A gradual change in implementation strategies started appearing: PFM was no longer just about launching something with a big bang. Instead, rather lighter and more subtle approaches were what caught our attention.
- It was also becoming evident that embracing new technologies was key to deliver a positive PFM experience.
- A number of banks were investing in new services, taking advantage of the capabilities available in smartphone and tablet devices, hence providing an experience that we had not seen before.
- What was picked up in 2012 has been reinforced with new developments: visuals have been largely improved and are becoming more intuitive.
- Developments are taking place across all three channels and are in several cases pleasantly integrated as part of the overall experience.
- The dominating approach is still to offer PFM within internet banking only, so this would suggest there is room for expansion across devices.
Types of offerings, how they add value to customers and where we are
In the last three years, it has become clear that PFM offerings have expanded and become more diverse, both in terms of channels and of specific features and approaches adopted.
One theme evident in reviewing the market is that each component offered naturally sits in one of three levels of progressive user sophistication. Starting at a basic level, progressing to an analytical level, and ending with an action-taking level.
I have used these three levels as a way of better showing what is happening where in the market place and also for understanding how banks are trying to engage customers.
- Basic visualisations. These make customers think about what is happening with their day to day finances, and build awareness and understanding with thw aim of encouraging deeper interaction with the bank.
- Analysis. Features which help customers analyse their personal finance: where, how, and how much they spend in relations with peers.
- Take-action tools. Provide engaging tools to help customers improve their personal finance situation.
Considering the these levels, the majority of available features in place aim to entice and educate, and still this is where banks’ main emphasis lies. Take-action tools (to a large extent) are something further down the road.
For example, it is hard to get an individual to take action without providing a visual and intuitive overview that can be analysed with little effort. The exception to this is savings goals. During the past 12 months we have seen a significant increase in savings goals features – some more advanced than others.
In several cases these have been implemented across channels putting them front of mind to customers. Not only is this tool easy to set up and grasp, it also works as a psychological reminder that you are on your way to achieve something. In some cases you can set up a recurring transfer in order to regular fund your goal, hence ongoing progress and making users more likely to achieve something.
The challenge for banks in relation to new players
We no longer think of providing PFM features as a matter of yes or no. Making transactional data visual and enabling customers to get a deeper understanding of their finances, including take-action type features should be a given in any digital banking road map.
When looking at most new market entrants they have applied this thinking from the onset. Below we highlight three appealing initiatives in Hello Bank!, Moven and Knab which all include PFM features and most importantly they are central to, and fit naturally into, the experience.
This is an area where banks, being on existing platforms, face a major challenge.
Looking at the current PFM experiences within banking, Danske Bank in Denmark is one of our top picks. It has created an interesting journey that can be summarised as follows:
- An extensive range of PFM features was introduced within internet banking several years ago. Characteristics: cumbersome to use, tucked away from the pages visited the most by customers after login and poor visuals.
- For the last two to three years Danske Bank’s developments have been largely focused on mobile and tablet. Basic, intuitive and relevant visualisations have been implemented. Characteristics: prominently positioned, great visuals adding value to customers by giving them a better understanding of incomings and outgoings as well as net balance developments.
- Recently, after having revealed a new, more, customer centric strategy in 2012 Danske Bank has implemented a refreshed, simplified and prominently positioned PFM features across desktop, tablet and mobile banking channels (in case of mobile and tablet it has been a matter of extending the number of features).
The key element of the tool that is a visualisation of recent spend per category (see screenshots below).
A major challenge for banks as of today is to deliver consistent user experiences across the digital banking channels. In Danske Bank’s case they have managed to deliver just that with the seamless feel as illustrated above.
Noticeably, Danske Bank has chosen to focus on refreshing only key features, hence more advanced features have been saved for later. A humble approach we quite like!
As I mentioned above much of the discussion a couple of years back was centered around how to make money from an investment, and even today we often get asked what is their business model when highlighting PFM initiatives.
PFM tools should not be judged by their immediate ROI, it should be considered as an investment in the overall user experience helping to build long term digital success by improving loyalty, customer satisfaction and engagement.
Today it is more important than to stand out with your service deliveries in a commoditized market.
A final observation is also that some banks still put PFM as optional features whereas our message is certainly to do the opposite.
Below are five central points to consider when it comes to developing PFM:
- Make PFM a default part of the overall banking experience.
- Position features on the pages that customers visit the most.
- Keep things simple to start with in order to get customers onboard (e.g. basic -> take action).
- Communicate to customers what you are doing and why.
- Be relevant by focusing on your existing customer base and the ones you want to attract .