Community
Personal Financial Management (PFM) solutions have experienced another phenomenal year. Since our last posts on PFM adoption trends and the reasons why banks choose PFM, several leading banks including Deutsche Bank, Allied Irish Banks, Consors Bank, and Hellobank! continue to join the PFM race.
Though most of us would agree that PFM is the logical next step for an online-banking-enabled institution, bankers themselves are constantly questioning the true value of PFM. The same doubt surfaces again and again:
“What is the ROI of PFM? No promises please, show us numbers… prove it that it works”.
This is a valid concern, considering that PFM implementations have produced very mixed results. Some banks have adopted PFM quite successfully. Others experienced results that fell short of their expectations, leading to overall disappointment with the tool.
This uncertainty sparked our quest to gather as much evidence as possible to support or reject the thesis that PFM enables a more robust ROI...
To do this, we analyzed a host of PFM implementations, namely those of BBVA, Barclays, Bank of Montreal, PostFinance, ING Netherlands, ABN AMRO, Rabobank, Islandsbanki, Alior Sync and First National Bank of Tennessee. We also examined the findings of well-known research organizations such as Forrester, Aite Group and Javelin Strategy & Research, concentrating only on gathering hard data. Mere promises about PFM’s ROI were left out.
The final analysis indicates that PFM offers 3 clear areas of benefits:
Now let’s look at the concrete results that various banks have managed to achieve with PFM:
1. Increased customer satisfaction
2. Improved customer loyalty and retention
3. Direct revenue generation and cross-selling opportunities:
Especially noteworthy are the research findings of Forrester, who concluded that in 4 years, mid-sized banks generated over 10M USD in revenue with the help of PFM. This revenue came from 3 main sources:
Taken together, these findings indicate that PFM indeed offers a compelling value proposition and can provide very robust ROI. However, not every bank has been able to tap into this potential.
Here are some of the main reasons that can hinder banks from achieving optimal results:
Final verdict: PFM can indeed deliver a robust ROI. But before questioning that possibility, banks should start by developing the right strategies to exploit PFM’s full potential in the first place. In other words, it is not a question of if but how to leverage PFM to generate that robust ROI.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
David Smith Information Analyst at ManpowerGroup
20 November
Konstantin Rabin Head of Marketing at Kontomatik
19 November
Ruoyu Xie Marketing Manager at Grand Compliance
Seth Perlman Global Head of Product at i2c Inc.
18 November
Welcome to Finextra. We use cookies to help us to deliver our services. You may change your preferences at our Cookie Centre.
Please read our Privacy Policy.