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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 Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.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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