As “PFM” fades, “PFE” steps in
Less work and more “in the moment” advice essential, says study
You are about the enter the den of your guilty pleasure of choice—a shoe store, a clothing store, a wine store, maybe even a bookstore for devoted print aficionados. As you cross the threshold, your mobile device begins to vibrate. It’s your financial app, remarking, “You’ve tended to overspend here. Are you sure you want to go in?”
Some people might appreciate the electronic guilt trip. Some might wince, but hit the “snooze” equivalent. Just one pair …Some might shrug and set out to hit a new record. Just one dozen …. pairs.
But whatever the reaction, the difference between the tool that produced that warning and technologies that tell you how much you’ve spent—or overspent—in a category is timing.
Personal Financial Management technology could tell you when you had already gone overboard.
Personal Financial Experience technology, being “in the moment,” can stop you before you do so.
That difference is one of a number of reasons that has led Celent to pronounce PFM—not so long ago one of the fintech darlings—as essentially “done.”
Why PFM failed to live up to billing
“Just a few years ago, personal financial management (PFM) tools were expected to revolutionize the way consumers banked,” states the Celent report Personal Financial Experiences (PFE): Putting the E In Personal Finance. “Since then, a lot has changed, and the initial hype has settled into apathy or even disillusion. PFM has been a worthy goal pursued by many providers, yet consumers (and many banks) continue to ignore its possibilities.”
PFM through banks never really grew beyond around 10% of customer bases, on average, according to Stephen Greer, author with fellow Celent analyst Dan Latimore of the report. In the wake of that, he says, many banks quietly shuttered their PFM programs.
Why did PFM flop?
This article first appeared in Banking Exchange on August 3, 2017.