Today’s PFM! what we learned when applying our financial manager with 33 thousand users in Brazil
By: Julio C Lavalle
Tags: Behavioral Economics, Social Impact, Fintech, Pfm, Financial Inclusion

Organizing personal and business finances is a difficult task! not because of the complexity of the task itself, but because of the work and mental energy required to focus on organizing them. In fact, many day-to-day tasks have become “almost” automatic. To get from point A to point B, we use Waze or Google Maps to define an exact route. Less and less — when we have to travel — we go to travel agencies and use Expedia or even Google flights (who will soon be implementing chat-bot like digital assitants like Mindsay) to find the cheapest tickets and buy directly from the airline. And better yet almost everything for free.

But what about our finances? Who automates and streamlines the process of achieving optimal financial health and get get rid of that tedious task?

The truth is that more and more is being talked about financial literacy and creating ways to disseminate the knowledge on how to manage one's finances. However, no one wants to do that task, the winner solution will be the one that is user-friendly, is time efficient and close if not 100% automatic.

Financial institutions had for years a gold mine in their hands, based on the transactional data of their clients. However, most personal financial management (PFM) systems focused on just displaying numbers without analyzing them or transforming them into actionable recommendations. For their part, users want to track what they spend, create budgets, visualize their next expenses and receive predictions of when they won’t “make it to the end of the month.”

The fact is that today’s PFM systems are focused on building convenience. The technologies that are built to make our lives easier, even if they save 5 or 10 minutes, are already a powerful differential.

This is our PFM in Brazil

And it is exactly this component that MiBolsillo / PoupaCerto has been building in order to provide an exceptional financial management experience, thus creating a competitive advantage.

The idea is to abandon the passive approach of gathering valuable information and wait for the user to come to look for it, to a more interactive and proactive approach. And then pay more attention to the delivery of actionable information along with suggestions that seek to reduce transaction costs (time, energy and money) therefore, model user behavior.

Taking advantage of solutions that have been building experience in this industry and in the context of an embryonic regulatory framework, fosters the creation of an open banking culture and empowers the end users, who, owning their own information, begin to trust and seek services that offer a comprehensive photo of their financial behavior to achieve their goals. And on the financial institutions side, to create cross-selling opportunities through their different products and services.

In this sense, MiBolsillo / PoupaCerto offers a:

(i) push-notification system to promote engagement and proactive behavior;

(ii) actionable management and automatic budget management;

(iii) user orientation on how to achieve their goals fast and easy;

(iv) a personalized notification system tailored to individual needs with real-time information. And

(v) end of day/week or month balance forecasts based on income, consumption and saving patterns.

The data we collect can also be used to guide product offerings according to the lifestyle and needs of the consumer. Beyond that, based on the classification of the transactions, it is possible to assume if the user has children, practices some type of sport or likes to go out to eat. The advantage of creating these profiles becomes great potential by providing targeted sales approaches, improving the click-through-rate (on average by up to 25%) compared to 7.6% when service offerings are not directed to a specific segments.

Finally, today’s PFM gives the opportunity to create brand loyalty of financial institutions, without being perceived only as an entity that seeks to generate sales. In addition to the possibility of exploring business models around the paid content perceived as great value for users.

Our experience in Brazil with 33 thousand users from a large financial institution proved an efficient use of the transactional data received from the users (94%) put to work to be transformed into behavioral insights in the areas of financial health, debt and consumption. Additionally, 60% of the users who interacted with the insights found the behavioral interventions (nudges to promote behavior change in a way of push notifications) valuable and showed positive trends in changing consumption habits.

If you are interested in knowing how our PFM works and how we can help your financial institution to promote financial health and face the digital financial transformation, let’s schedule a call!