Personal Financial Management: The Devil Is in the Details

by Jacob Jegher, August 26, 2011
Industry Trends
North America

Abstract

Banks have been extremely slow to catch on to the personal financial management trend and have had difficulty understanding how PFM fits into the online banking universe. A number of banks offer solutions, but they do not hold a candle to the products offered directly to consumers. This is about to change, but consumer adoption will take some time to materialize.

Celent firmly believes that consumers should be taking care of their PFM needs at a financial institution. The time is right for PFM, but the stars aren't aligned yet. Adoption of PFM is still extremely low, and there are several hurdles: technology (problems with account aggregation and auto categorization), user experience, and consumer behaviour, according to a new report, Personal Financial Management: The Devil Is in the Details.

The good news is that adoption is going to rise. This report examines and analyzes the state of PFM at financial institutions. It begins by delving into why PFM is important and explaining some of the adoption hurdles. It then explores what is required to grow PFM use and goes over how solutions will evolve. Finally, the report provides insight regarding the role of emerging devices like tablets, and presents a framework to serve the device trifecta.

“PFM is going to become the cornerstone of online banking. Financial institutions and software vendors have a lot of work to do, however, in order for adoption to accelerate,” says Jacob Jegher, Senior Analyst with Celent’s Banking Group and author of the report. “Banks are accustomed to bolting-on piece after piece in their online offering. This creates a tangled mess that is difficult for the bank to manage and challenging for the customer to use.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Jumping on the Bandwagon

5

Adoption Will Grow When PFM and Online Banking Unite

7

 

Online Banking Bolt-On

7

 

A Section of Online Banking

8

 

PFM = Online Banking

9

Banks That Downplay Aggregation Are on the Wrong Track

11

 

Account Aggregation Is Not PFM

11

Adoption Conundrums–Banks Have Work to Do

14

 

The Emphasis Must Be on User Experience

14

 

Banks Must Define User Roles to Tailor Solutions

15

 

PFM Adoption Has a Long Way to Go But Will Climb Steadily

17

Tablets and Mobile Devices Take Center Stage

21

 

What Comes First, the Tablet or the Desktop?

21

 

Online Banking Must Be Device-Agnostic While Providing a Tailored Experience

21

Conclusion

24

Leveraging Celent’s Expertise

26

 

Support for Financial Institutions

26

 

Support for Vendors

26

Related Celent Research

27

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