Four Features That Every PFM Needs

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The numbers are staggering...in 2017, mobile banking adoption had leveled out at about 10-12%. But according to a Cornerstone Advisors study, as of May 2021, mobile banking usage is up across all age groups. For Gen Z, Millennial and Gen X, usage ranges anywhere between 85-95%.  

With such abysmal utilization numbers just 4 years ago, it’s not surprising if mobile development wasn’t your top priority. And if you now feel like you’re behind, you’re not alone. A large portion of the industry is playing catch-up and the race is on to deliver top notch products, yesterday.  

While it’s tempting to focus on adding the newest bells and whistles, this is a call to focus on the fundamentals first. Personal Finance Management (PFM) solutions weren’t unutilized in 2017 because no one knew about them, they had been tried and found wanting. And it’s important to not underestimate the challenges of user pain points. Apps that aren’t easy or intuitive get abandoned before a user can fully explore their capabilities.

With nearly a decade of experience in the realm of personal finance, I’ve heard and experienced firsthand the gripes users have about PFMs. So here is my list of the top 4 fundamentals every PFM product owner should be considering and a look at a few companies doing it right.

Frictionless Aggregation

Never underestimate the power of dependable, simple features. Users need an easy way to track their spending, evaluate their investments, and analyze their debt. The developer that creates seamless access to all checking, savings, credit card, and investment accounts may find themselves with the winning ticket.

The Raddon study of Millennial and Gen Z users found that the most desired mobile banking feature was the ability to access all of their accounts in one location. There’s a reason this feature makes the “must have” list -- it’s not easy to find. The PFM that allows universal access with minimal friction could generate significant user stickiness. Similarly, the app that flounders on this foundational element may find significant user attrition.

Marcus is one of the players that’s doing this well. They provide users the ability to connect hard to link accounts including smaller banks, credit unions, and lesser used credit card providers. You might think this process is the same since so many fintechs rely on the same APIs, but Marcus offers a streamlined process requiring fewer screens. Most importantly they provide immediate feedback when a link fails and the opportunity to request missing institutions is surfaced.

Value-Based Goals

Individuals are more likely to stick to goals when their goal is tied to their values. Yes, it’s important to build an emergency savings account, but a customer won’t persist in their monthly savings contributions solely out of devotion to the emergency savings account. It’s the underlying need for stability, financial freedom, or independence that fuels the commitment.

A fintech, Qapital, allows users to upload their own pictures and create a personalized title for their goal. A woman may upload a photo of her kids and title that goal “Sara and Jack’s Playhouse.” With a picture and few words, this individualization allows her to evoke a dream of letting her children play safely in the backyard of their own home.

Such a level of personalization is far more likely to garner success than a generic down payment goal with a clipart house. The ability to personalize a goal and tie it to the underlying value will encourage the user to keep their future self in mind.

Call To Action

The power of indecision is a real challenge and can stop users in their tracks. Marc Oliver Rieger, a professor at Trier University in Germany, explores the high cost of delayed decision making. When actions are postponed in the pursuit of additional information, the user often doubles or triples the time invested in research, likely with no change in outcome.

Humans are not hard wired to make sweeping changes, but a PFM that provides a call to action can move a user through the paralysis of indecision. The Stanford Social Innovation Review defines an effective call to action as specific, achievable, and easy. The ability to provide small, relevant suggestions at the correct time can get a user moving forward.

Shameless self-promotion -- this is where FinGoal thrives. Find Money analyzes user transaction data and provides relevant, painless and actionable suggestions for ways to save money in their daily spending.

Customization

Your users are unique and their needs are not the same across the board. If a PFM doesn’t meet these needs the user is likely to shop around for one that offers more customization.

Zeta allows users to share a money managing app for household budgeting. But they also built a feature for users to build individual budgets. Zeta further offers the ability to split transactions and easily pay each other back by Venmo or PayPal. While not every household will choose to use this feature, it’s built knowing that not all financial partnerships function the same.

Money is an emotional topic, and the way people choose to manage their resources is as unique as the couple themselves. Zeta goes a bit further in customization and includes memos and messaging features to allow for clarification of potentially confusing expenses.

Make it a Combo

While each of these features creates an individual touch-point, the ability to layer this functionality is what really moves a PFM toward personalization.

MX’s budget widget is one example of the compounding power of quality features. Using 6 months of aggregated user data, the widget auto-generates a budget based on past income and spending.

While the auto-budget may not be entirely accurate the errors actually create a call to action. It’s far easier to correct mistakes than to start with a blank slate. And the beauty of this widget is it allows the user to fine-tune the numbers, add info, or correct mislabeled transactions. They can even take a deeper dive by adding their own subcategories.

The Power of Getting It Right

It’s true, the big name players have attracted the lion’s share of users, but there’s still an opportunity to gain traction. Raddon’s June 2021 study indicated that while the majority of Gen Z and Millennials are banking with large FIs, 33% were willing to move to another institution provided they offered a quality mobile experience.

Which means, developing an improved and personalized digital banking experience may actually open the door to attract new customers. This also means getting it right is going to be essential to maintaining the customers you already have.

While the time development investment is real, you don’t have to do it alone. There are a number of infrastructure solutions, like FinGoal, that are out in the market and will create efficiencies for your roadmap. The solution to your challenge likely already exists, and odds are you can implement it much faster than anticipated.