More and more US and European banks are offering PFM solutions in their online banks to strengthen the relationships with their customers and compete with independent PFM web sites such as Mint.com. Customers love PFM but what's in it for the banks? Georg Ludviksson , CEO of Meniga describes the experiences of Meniga's partners and other banks of offering PFM solutions through their online banks.
Presentation held at the Bank 2.0 conference in Stockholm on November 16th 2010. See www.meniga.com and www.bank20.se
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These features are available since decades in Intuit Quicken and Microsoft Money, why not use them? Because they cost $60-80, and you have to export your transactional data from the online bank and import it to this desktop softwares. Two tasks that block customers from using such kind of software.
3. Venture-funded Nordic software company Born from the Icelandic financial crisis Focus on PFM Solutions for Retail Banks Operating PFM with retail banks since 2009
8. One in five US banks now offer PFM Aite Group: PFM: A platform for customer engagement, February 2010 Over one third of Americans now use online banking tools to manage their finances – a 27% increase since 2009 According to Intuit Financial Services: http://www.ifs.intuit.com/ 60% more people use PFM provided by banks than independent PFM web sites Online Banking Report, May 2010 Consumers are twice as likely to trust a bank over a PFM web start-up (71% vs 35%) Javelin Strategy report on PFM Tools
16. Only a handful of banks in Europe offer comprehensive PFM to their customers ...but many are in the works ...and most are reviewing their strategies PFM Consumer awareness is still much lower in Europe than in the USA Independent PFM sites exist in many European markets but are struggling
20. Over 20% of the bank‘s online users signed up within 6 months Over 75% of new users login again within 2 weeks Over 25% of users visit more than 5 times in the first month and become highly active Average 12 min and 35 pageviews per visit Excellent Engagement Metrics
24. “This is the most user-friendly budgeting tool that I have ever known. Managing my money is really simple and I always have an up-to-date picture of where my money is going. I have improved my spending habits and am therefore able to pay down debt faster.” Man in his 60s
27. 66% say Meniga has helped them see where they can improve financially Has Meniga helped you see where you can improve in your household’s finances? No: 34% Yes: 66%
28. 41% say they have improved their spending behavior because of Meniga Has your spending behavior improved after you started using Meniga? No: 59% Yes: 41%
30. “Javelin data illustrates that financial institutions that install compelling personal finance management tools stand to reap the benefits of increased customer loyalty, higher usage, lower costs and added revenue.” Javelin Strategy & Research, September 2009
31. PFM strengthens your brand 20-40% of your customers will love PFM PFM is socially responsible–it‘s the right thing to do 80% of Meniga‘s users (20% of bank‘s customers) say PFM is an important and valuable service Stronger effect for an early-mover
32. PFM vastly Increases Customer Retention Some banks have seen a reduction of up to 50% in accounts closed after introducing PFM OnlineBankingReview, July 2010 PFM users build a history they don‘t want to lose We live in a time where loyalty is on the decline Customers who use the PFM tools are significantly more profitable OnlineBankingReview, July 2010
33. 72% say Meniga increases their loyalty to their bank State how much you agree or disagree with the following statement: “My bank offering me free access To Meniga increases my loyalty to the bank”. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% Mjög sammála Sammála Hvorki sammála né ósammála Ósammála Mjög ósammálaStrongly agree Agree Neither agree nor disagree Disagree Strongly disagree
34. “PFM can be an even more powerful retention technique than other online features, even bill payment. Why? The average user with a dozen or so payees could move their bill payment account to another bank with an hour or two of work. But with current practices, it’s much more difficult, if not impossible, to move transaction history to another bank.” Javelin Strategy & Research, September 2009
35. Customer Engagement and Cross-Selling More and more people prefer never to visit branches PFM is a major new low-cost channel for engaging with your customers PFM usage says a lot about users‘ financial situation and brings unique data to target marketing efforts PFM is a natural channel for recommending products and services
36. PFM helps you Acquire Customers Stand-alone PFM attracts new customers PFM can increase the effectiveness of other acquisition methods, such as credit card offers PFM users use your credit and debit cards more - 20% of Meniga users have increased use of cards issued by their bank since signing up
38. PFM increases Efficiency PFM is a big step towards the „virtual branch“ PFM partly automates the advice customers currently seek in branches. PFM should be part of a long-term strategy to stay close to your customers
39. “Personal Finance Management (PFM) functionality is the highest potential ROI project for retail financial institutions to implement in 2010.” Online Banking Report, May 2010
43. Step 1 Step 2 • Re-skin Meniga to match bank‘s branding policy • Implement back-end integration to allow for secure flow of data (transactions) Timeframe: Few months • Gradually increase integration with online bank • Move towards a seamless user experience Timeframe: Variable Stand-alone PFM PFM as part of online bank