How can a PFM help you to increase adoption and engagement on your digital channels

by | Sep 8, 2023

Most financial Institutions struggle to deliver personalized experiences and to generate engagement with their customers. Does it sound familiar to you?

The reasons are diverse. Some of these banks haven’t had the opportunity to invest in advanced technological infrastructure and digital banking platforms yet. Others aren’t taking enough profit from their users’ financial data, and so they don’t get to connect properly with their customers. A lack of data analysis and understanding stops them from delivering actionable personalized insights and experiences. 

But in the midst of this challenge, there’s something that banks can do. The integration of advanced personal financial management tools and banking insights solutions that allow 1:1 communication with customers through data-driven insights.

PFM and Banking Insights tools as enablers of personalization for a greater adoption

A Personal Finance Management, or commonly known as PFM tool, is a digital banking solution that helps users to better understand their finances by analyzing their unique behavior. This can also apply to other specific segments like SME who will need help to better understand their businesses thanks to a “virtual CFO” as our BFM

If you think of a PFM (or BFM) as a single tool for engagement purposes, our experience says it won’t be enough. A PFM is just one of the solutions to build the perfect environment for customer engagement to happen.

However, engagement actually comes when you’re able to understand financial data, preferences and behaviors from your customers’ transactions and you turn them into actionable digital banking insights using a specific solution (ours is Stands Engager), usually integrated into the PFM control tool.

Engager uses the enriched data that Financial Institutions collect (e.g., transactions, invoices or other non-financial data to detect patterns and trigger behaviors of customers and offer the next best action according to their need, in real time. As a result of its flexibility, Strands Engager ensures a faster time to market, a detailed and complete understanding of the client and their financial behavior thanks to the data enrichment and analytics and machine learning capabilities and allows a real-time communication, which is the core value of our products, since we strongly believe that customer needs and issues must be solved immediately.

Edoardo Borsari
– General Manager at Strands

PwC and Strands report: the value of personalization for PFM

10 features that your PFM must include to increase engagement

A robust and competitive PFM is not really a simple tool, although it should be for the eyes of the end user.

Some of the features that make a PFM a highly competitive tool, and that you should make sure to integrate into your bank platform, are the following:

  • Expense tracking monitoring and categorization of customer expenses
  • Budgeting tools for creating and tracking financial goals
  • Transaction aggregation from various bank accounts (thanks to Open Finance capabilities)
  • Automatic categorization of transactions into different spending categories (e.g. restaurants, travel, subscriptions…)
  • Data visualization with graphs and charts that represent your user’s financial data
  • Cash flow analysis to see inflows and outflows and manage short and long-term financial stability
  • Customizable alerts and notifications for goals achievements or unusual account activity 
  • A financial insights solution where you can create hyper-personalized and data driven-insights

The good news is that these features match with the guidance expected by users from a bank. Furthermore, they value aspects like a good user experience, simplicity, savings and investment advice, and real-time banking insights. So these features may positively affect acquisition and retention increase from different segments, especially millennials and Gen Z.

So the benefits of a good PFM tool should also be two-way. 

The advantages of PFM and Banking Insights solutions for banks and end-users

As seen before, Personal Finance Management (PFM) solutions offer several benefits to banks and financial institutions, helping them enhance customer engagement, loyalty, and overall financial well-being. 

Here are the top three benefits of PFM for banks and users:

Benefits for banksBenefits for end-users
Improved Customer Engagement and LoyaltyBudgeting and Expense Tracking
Banks that provide PFM tools create a stronger bond with their customers. When customers find value in these tools for managing their finances effectively, they are more likely to remain loyal to the bank's services and recommend them to others.PFM tools empower users to create budgets, set spending limits for different categories, and track their expenses. This helps users identify areas where they can cut back on spending and make more conscious financial choices.
Data-Driven InsightsData-Driven Insights
PFM solutions generate valuable data about customers' financial behaviors and preferences. Banks can use this data to gain insights into customer needs, spending patterns, and financial goals.Data-driven insights can help users identify areas where they can save money and make smarter financial decisions, improving their financial wellness.
Cross-Selling OpportunitiesFinancial Education and Guidance
With a deeper understanding of customers' financial situations, banks can identify opportunities to offer relevant financial products, such as savings accounts, loans, credit cards, and investment options. This targeted approach can result in increased cross-selling and revenue generation for the bank.Many PFM tools offer educational insights, tips, and advice on how to manage personal finances. Users can learn about budgeting, investing, debt management, and other financial concepts, improving their financial literacy over time.

→ Find out the three reasons why banks choose PFM tools

Examples of how to maximize engagement and personalization with PFM and Data-driven insights

The possibilities are endless when it comes to engagement and personalization in digital banking. Let’s focus on three different approaches: deposits, cash-flow and invoicing, and liquidity risk.

Example 1: For Increasing Deposits

Focus on transitioning customers from saving to investment by supporting deposit growth and cross-selling products. We use ML algorithms to automate saving goals and promote creditworthiness, helping to increase the digital channels adoption by different customer segments, like Gen Z.

Example 2: For cash-flow and invoicing

Tracking user’s transactions and invoices helps make sure SMEs have enough liquidity coming in. This helps you be prepared for any business customers’ expenses ahead and lets you figure out the best advice for their cash flow management.

Example 3: For Liquidity Risk Situations

Look at how your customers use their money to anticipate when they might need a credit or facilitate solutions like BNPL. You can predict when the economic situation of retail users might get unstable, and offer them solutions like credit lines or transfer funds between their accounts.

Final Thoughts

In such a fast-changing environment like digital banking, banks and credit unions must provide exceptional customer experiences to stand out from the crowd.

Personal Financial Management and Banking Insights solutions have evolved into an essential component of digital banking, offering users a comprehensive solution for managing their finances effectively. At the same time, it allows banks to implement strategies that focus on user experience, education, and personalization. Thanks to that, banks can drive higher engagement and personalization by nurturing stronger relationships with their customers. 

Strands suite of products can drive your bank or financial institution towards better adoption, engagement and retention ratios. Our intuitive PFM and its data dashboards can bring users the sense of control over their finance they need to feel financially confident.

Furthermore, a good personalized advice and data-driven insights strategy will improve the understanding and use of your platform and finances, offering conversational banking and strengthening your relationship with your customers.

Don’t hesitate to contact us if you want to learn more about Strands suite of products to help you on personalization and engagement.

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