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An article relating to this blog post on Finextra:

Americans prefer to access PFM tools though bank sites - survey

Americans prefer to access personal finance management (PFM) tools through banking Web sites, with security concerns trumping the advantages, such as account aggregation, offered by third party provid...


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The PFM debate

This is very interesting research from Fiserv that demonstrates how security-conscious consumers are, despite the benefits that PFM sites promise. True, a full view of all your accounts in one place via a PFM site gives a useful indication of all assets and how best to manage them, but the threat of losing all those assets through a security lapse is a risk. Those who were polled for this piece of research are right to be worried as these aggregator sites may pose a weak link in the security chain, for example if they aren't PCI compliant or dont employ sophisticated anti-fraud measures like 'out-of-band' communication and IP Profiling. 

There are also other worries for me, as an anti-fraud specialist.  One is that the originating banks may not be able to see all the activity performed on the sites so will not be able to build a robust profile of their customers’ activity.  On top of this, the behaviour of the sites is often close to that of a trojan whereby log in and page clicks are done rapidly by a script - this could cause a bank to have false alarms of malicious activity on an account leading to disruption of service for the customer. 

All of this means that it is vital that customers wanting to use PFM sites take the time to understand the way in which they work and how liability for fraud may shift as a result. 

I agree with the George from TowerGroup and I think it will be interesting to see is how financial institutions evolve their current online offerings. If there is a desire from customers for PFM functionality, but not the desire to use PFM sites, perhaps that is indeed where the financial institution can step in.

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Comments: (3)

A Finextra member
A Finextra member 25 August, 2010, 08:32Be the first to give this comment the thumbs up 0 likes

I cannot agree more, these kind of services should be provided by the banks themselves with the same level of security as it is in their online banking today.

A Finextra member
A Finextra member 26 August, 2010, 02:19Be the first to give this comment the thumbs up 0 likes

There is a deeper and simpler explanation for low online PFM usage.  Its just too much work.  Back in the day when PFM meant Quicken or MS Money as an app on your computer the usage penetration was in low single digits.  The fact we have online PFM's does not alter that 'too much work' aspect except to the extent that it can download data and automatically sort it as Wesabe had begun to do.

I really cannot see PFM becoming mainstream until customer data can be accessed real time, automatically generate tips, advice and spending assistance with web and mobile being connected.  In theory a bank is best placed to do that but time will tell.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 27 August, 2010, 12:12Be the first to give this comment the thumbs up 0 likes

BofA and Wells Fargo are a couple of banks that provide fairly comprehensive P2FM/PFM capabilities on their own websites. However, the insight consumers can gain from them is restricted to their account(s) in the respective bank. This is obviously not too useful given that a person's total financial position and his or her ability to control it is clearly a function of all their accounts - checking, savings, credit card, etc. - across multiple financial institutions. Besides, single bank PFMs are likely to push only their own products, thus making them a biased source of budgeting recommendations.

Cross-account aggregation and unbiased offers are two benefits provided by neutral, non-bank PFMs, and it's difficult to image how banks can match up with them here. 

Even if a single bank PFM seeks to provide cross-account aggregation, like HDFC in India does with its "OneView" service, consumers have to disclose Internet Banking credentials of the accounts they hold with other banks to the PFM-providing bank. But, this seems only slightly less skittish than doing so with neutral PFMs.

Surely, we don't expect one bank to promote another bank's product, so the benefit of unbiased offers is virtually impossible to get from a single bank PFM solution.

In PFM, we see an interesting tradeoff between trust and functionality. This might get resolved only by being more pragmatic about the expectations from a PFM (e.g. visibility versus budgeting) or by the entry of a bank-like trusted entity (e.g. retailer? telco?) into the role of a PFM provider.  

 

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