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Unleash the Power of Personal Financial Management for Customer Engagement


The banking industry is at the cusp of a revolution – heavily influenced by customers with growing technology prowess. Adoption and promotion of personal financial management (PFM) will help maximize customer experience and engagement with banks. Take a look at the challenges and need to embrace PFM for continuous growth.


Online personal financial management—also called money management or wealth management— has attracted the attention of technology managers as well as business decision makers across the global retail banking industry.

While banks have traditionally offered advisory services to high net worth (HNW) customers, they have faced challenges in cost effectively extending this service to other customer segments. With limited insights into the financial goals and behaviors of their customers, banks face challenges in cross-selling the right products and services, or tailoring them to meet specific needs. As a result, banks experience hurdles in customer acquisition and retention.

The sharing of insights with the customer, fine tuning with the customer's participation, and inducing this through 'customer experience design' are the key highlights of PFM. Extending the PFM solution to include risk profiling and continuous risk assessment will help enable the bank to construct custom products and services for this customer and go beyond transactional services.

Embrace Personal Financial Management for Continuous Growth

Specific improvement on a particular business case is not enough to engage customers; retail banks need comprehensive personal financial management solutions to deliver a wide range of potential benefits to customers, while ensuring better returns on investment.

The quantifiable and non-quantifiable benefits of PFM fall into three groups: improved customer engagement, cost reduction, and increased revenue from various sources.

Improved customer engagement

  • Tailored advice for customers: Consumer insights from money management will ultimately lead to more consistent, automated, and efficient financial advice as these insights are derived from spending categorization and behavior analysis.
  • Improved customer care: Retail banks can collect insights from financial management and through analytics of omni-channel banking activities of customers across other banks. The engagement pattern and other such data from PFM provide crucial information facilitating better service to customers as well as initiating prevention steps (e.g. alerts when credit limit utilization is nearing exhaustion, increased authentication based on rules).
  • Reduced credit risk: With deeper insights into the financial situation of customers, retail banks can also help identify risky customers and provide lending services in a more responsible manner, thereby avoiding bad debts as well as ensuring that customers do not take on too much debt.

Cost reduction

  • Increased adoption of online banking: Retail banks can drive the adoption of online banking with personal financial management offerings.
  • More electronic payment usage: Personal financial management encourages customers to use electronic payments in place of cash because electronic payments, through credit cards or debit cards, are usually categorized automatically as online money management while cash payments are not.
  • Reduced paper work: The proportion of online customers who have given up paper statements remains low. Providing customers with easy-to-use online financial overviews can encourage customers to abandon paper statements.

More revenue

  • Better cross-sales: With customer insights gained from personal financial management and personalized marketing messages, retail banks can take advantage of cross-sell and upsell opportunities to deliver more relevant offerings to customers.
  • More marketing opportunities in online banking: With the growing adoption of online banking, personal financial management solutions can help retail banks to draw attention to product and service offers available on the online banking channel via official websites or corporate mobile apps.
  • Direct fee income: Retail banks could theoretically generate revenue directly by charging for online money management. Offering personalized financial management services to help achieve customers' personal financial goals could potentially raise their willingness to pay premium charges for such a service.

PFM as an enabler

Careful and comprehensive adoption of PFM has the potential for bringing financial prudence, enabling goals, and creating a long term engagement (for the bank). Yet, continuous information collection can always turn out to be sensitive to the customer, for instance, expense categorization – getting the customer to record the expense, and on time.

Various studies on customer behavior reveal that a considerable percentage of people procrastinate. Hence, customer experience design becomes a key tool to change this behavior. The bank uses its data warehousing to categorize, but to fine tune the categorization the bank needs customers participation. Push notification and speech-to-text conversions are used to enable the customer experience to induce this behavior in the customer.

The studies further reveal most of the customer situational context is for a short time period. So near real-time analytics is needed. Instead of looking for a full-fledged real time analytics infrastructure, a Lite analytics engine is used to connect seemingly disparate events and converge to a treatment strategy.


While personal financial management (PFM) has been in focus for quite some time, it has failed to gather momentum for various reasons. In the age of the customer, with customers changing the rules and wielding power, there has been a shift in the dynamics of retail banking, necessitating banks to identify new ways of engaging with customers. This is pushing banks to adopt customer-centric initiatives to improve engagement and deliver an enhanced experience.

To retain market share, retail banks must transition from localized operations serving a limited populace to delivering omni-channel banking services covering a wide variety of transactions across geographies. While omni-channel banking has caught the imagination of the customer community, and offers various conveniences, it reduces personal contact between banks and customers, cutting opportunities of engagement.

Banks can address this issue by implementing personal financial management solutions that allow customers to manage their finances and achieve financial goals, while improving customer acquisition and retention.