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Why are there so many PFM demo’s?

Some people had an issue with the number of personal financial management (PFM) solutions that were presented at Finovate last week.

To be honest, they had the same issue in New York and in other innovation events preceding.


Because the view is that PFM is a mature market that started with firms like Mint and is now crowded out with too many players, most of them backed by Yodlee.

Now if this is not your space then don’t bother reading on, but it is a space I’ve tracked for a while as, back in the late 1990s and early 2000s, Yodlee were making aggressive noises in the retail online world as the aggregation engine.

I should know, as we partnered with a competitive firm and there was much sabre rattling over who would win the aggregation wars.

Answer: they both lost.

Aggregation a decade ago just didn’t work.

It was too early.

Customers didn’t like the idea of giving their bank details and passwords to a strange, untested, third party engine.

And banks told them that if they did, and had their funds swiped, it was their tough justice.

So aggregation stuttered and stagnated.

But you have to hand it to Yodlee as they're still around today and are successful, partnering with many of the key innovation providers of PFM that are on the Finovate stage.

So why is Yodlee working today when it didn’t a decade ago, and is PFM the same as aggregation?

No, not at all.

PFM is a functionally rich set of financial tools that help consumers – and businesses for that matter – aggregate their financial transactions services across multiple providers into an advisory engine that can help them get better returns from their money.

PFM will link with other users like you and show you how to improve your financial returns based upon what people like you do; PFM might link to your mobile and social networks, allowing you to do a lot more intelligent financial structuring and operation; PFM can alert you to budgetary and balance issues, payments and billing notices, and interest saving or gaining opportunities.

In fact, dependent upon which PFM provider you go with, PFM can pretty much do anything with your banking service you want … and the PFM providers are all popping up to show different capabilities in what is an increasingly crowded space.

Some want to focus on the social aspects of finance, whilst others on the financial management aspects; some want to provide offers and coupons, whilst others want to provide advice and analysis of your financial behaviours; some want to provide PFM online, on the mobile and on the tablet PC, whilst others only care about functionality rather than interface; and so on.

In other words, all of these PFM systems are slightly different with some easier to use than others, some more functionally rich than others, and some clearly in the lead over others.

And with Mint leading the way over the last few years as a PFM provider of choice through third party services, expect all banks to rollout some form of PFM over the next few years to be competitive.

That’s why there were so many PFMs at Finovate … because the banks will all be buying and rolling out this stuff in the next year or so, if they aren’t already.

Now then, what’s next?

Oh yes, CFM … the PFM for Corporates!


About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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  • Chris
    I could not agree more on your points.
    Today’s PFM is not longer a question of quantity. It is becoming a question of quality.
    Those like Brett and others, who seems a bit getting tired of the PFM presentations, certainly are more familiar with this stuff. For them it is nothing strategically new.
    But for banks in the German speaking part of the world, PFM is only at the step of its birth. PC Tools like Quicken or Starmoney never succeeded in the German market. New tools like Meniga could, because they are offering a new quality of PFM.
    And indeed, it is not only account aggregation. It is an entrance into a bank 2.0. For many banks that are looking for something concrete in the new dimension of social media banking it could be the first but important step into a new world of retail banking.
    Maybe the name “Personal Finance Management” does not appear “sexy” at a first glance. But its new functions are sexy for the customers.
    I am quite sure, that we will see major steps in this market within the next one or two years.
    Kind Regards
    Hansjörg Leichsenring

  • I agree that all banks will eventually be rolling out PFMs. My question is, will ‘independent’ PFMs like lovemoney win the day or will people just end up using their primary bank’s version instead? And will these tools all be based on Yodlee or will bespoke versions turn out to be better?
    Personally, i thought the Yodlee demo was a real stinker.

  • Chris Skinner

    And don’t forget to pronounce it right Joe, it’s “Yodle-eeeeee”

  • You probably already have Chris but be sure you and your readers keep an eye out for recent Y-Combinator graduate ‘Indinero’…it’s the start of PFM for Corporates you mentioned.
    Nice post.

  • Hang on … PFM for corporates, isn’t that cash management?
    I did get a bit tired of the PFM demos at Finovate, but not so much because of the demos or companies themselves but because of the key issue that these presentations brought to light, namely a complete lack of standards in this domain.
    Wouldn’t it be wonderful if there were a messaging standard that would allow a PFM system to collect your account’s data in a secure manner without having to rely on screen scraping and stored passwords as is mostly the case today? Much like the SWIFT statements that allow banks to perform cash management for corporates today. Apparently in some countries such standards exist but it’s far from being widespread and certainly not universal. Now this is something where we could maybe make a difference …