Tuesday, June 11, 2013

The rise of Personal Finance Management services

Last year I was lucky enough have a senior role as the Head of Digital for a financial organisation. This got me back into the Financial Services arena, where I could leverage the experience I’d gained from several years of agency-side delivery in this sector.

Diving into this industry again after several years out of it, I was struck by the changes that had taken place. For example: The reputation of banks was lower than it had been nearly 10 years ago (primarily due to the financial crash, but also because of the rise of customer complains brought on by better communication methods such as the Internet and Social Media) and people were eventually breaking away from the traditional and clumsy segmentation models of life stage and age.

However one thing in particular grabbed my attention more than most, the potential for banks not to own the financial interface with the customer anymore and that a service layer could be placed between the user and financial services provider. In other words, the market was far more likely to use personal finance management tools now than ever before.

But why are online personal finance management services now being considered? Especially when banks have spent so much money and time creating their own direct banking channels?

1. Users want independence
Having a product agnostic platform puts the user back in control. Look at the gradual dominance of the aggregator in financial comparison; from credit cards through to car insurance, online now provides a way of comparing and contrasting multiple products in a single place. This independence from a specific financial services provider gives the user a place they can trust and not have cross-sell and up-sell offers from the same company tirelessly pushed to them at every opportunity.

2. Users need better interfaces
All online banking and services sites are playing catch-up with each other, but all so very slowly. Thanks to lengthy development timescales, the need to comply with in-house governance and the very nature of financial brands to be less agile and more risk averse... you then get products that work, but are rarely shining examples of fantastic functionality, user experience and design.

3. Users have more choice
The financial services landscape has changed. These days users not only have the ability to switch providers for their insurance and banking needs, this switching is becoming a legal requirement that all FS providers must support. Add to this the fact that so many financial companies have now all diversified into as many different markets as possible (usually by white-labelling everyone else’s services) and the choice amongst products is bewildering and still growing...

When you then compare these facts with the ability of smaller, digital-first and more innovative personal finance manager sites, you can start to see why some banks and building societies are getting worried. The rest, well they’ll have a nasty shock when they eventually wake up.

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