Help me track my money! Banks are offering personal financial management tools (PFM) online and on mobile to help their customers get a better handle on their spending and saving.

• Author: Stewart, Deb
• Position: Company overview

WHY SHOULD BANKS PROVIDE PERSONAL FINANCIAL MANAGEMENT (PFM) TOOLS ONLINE AND ON MOBILE?

"When consumers lack information on their money, they're not in a position to save, to spend or to invest," notes Mark Schwanhausser, senior multichannel financial services analyst at Javelin Strategy and Research, Pleasanton, Calif. "They can't assess where they are today and they can't move forward."

In a 2011 study, Javelin discovered that 14 percent of consumers (17 percent of Gen Y) do not manage or monitor their finances. This segment had nearly doubled since 2009.

Banks can help solve this customer problem by offering PFM tools and, in the process, the banks potentially differentiates themselves and become more valued financial partners, Schwanhausser adds. "Putting personal financial management tools at the heart of online and mobile experiences will keep information in front of your clients and create a daily conversation between you and them."

So what is PFM? From the perspective of consumers, it's the ability to have access to the information they need to track, understand and manage their financial lives. From a banker's perspective this translates to core functions that enable customer to:

* See all of their accounts at a glance. They can view balances and transaction summaries from one institution or aggregated from all the customers' financial service providers.

* Monitor spending. They can see where their money is going by category and compare that to their planned budget. They can analyze underlying transactions in each category.

* Set budgets. They can plan spending by category--housing, groceries, entertainment--whatever makes sense for each customer.

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* Monitor cash flow. They can see dollars moving in and out of accounts and easily determine what is available to spend.

* Set and monitor savings goals. They can plan specific dollar goals and timeframes and monitor progress toward those goals.

* Optimally integrate all of these features with bill-payment, transfer and other online banking capabilities.

Third-party providers such as Mint.com, Strands Personal Financial Management and Yodlee have done a great job of addressing most of these consumer requirements, with Mint.com currently reporting 9 million registered users. "The good news for banks is that a recent study indicated that 75 percent of consumers would like to use their primary financial institution for PFM," says Peter Wannemacher, senior analyst at Forrester Research, Cambridge, Mass. "Banks have done such a good job of educating consumers to protect their private information that they are reluctant to share account information or passwords with any third party."

Let's look at two approaches taken by banks to address this product category: PFM tools that are developed by the bank in-house, and tools that are supplied by a third-party software supplier.

Wells Fargo & Co.

Wells Fargo & Co. (assets: $1.1 trillion), San Francisco, was an early bank entrant to PFM, developing and introducing its first offering in 2005. Its current My Money Map product was launched at the end of 2010. This product builds a comprehensive financial view for customers by leveraging earlier offerings: My Spending Report, Budget Watch and My Savings Plan.

"The My Money Map product is a tangible demonstration of the Wells Fargo brand promise--it is a great tool to help make our customers financially successful," says William Robins, vice president of PFM at the bank.

"We recognize that each of our customers is in a different place, trying to get to a different place," says Robins. "So you can reach My Money Map through a primary tab in online banking, from product account summary and account activity pages--in ways that work for that customer. We've seen that customers want to manage their money with different levels of rigor, and the various features of the product allow us to meet the customer where they are."

My Money Map is an automatic...