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2.3.4 Personal Financial Management (PFM)

The change currently being experienced by the classic service offer from banks can be seen very clearly in the area of personal financial management. Every person conducts many hundreds of financial transactions each year. Only a fraction of these transactions are conducted via the principle bank. They also include payments with credit and debit cards, second bank connections, cash transactions and many other types of transaction. It seems very difficult to maintain control of this huge amount of data. And if we include the large number of contracts with banks, insurance companies, social insurance funds, etc. of every single customer and his or her family, the task is almost impossible. PFM solves precisely this dilemma to a large degree. It allows customers to maintain an overview and control of their own financial transactions and contracts.

PFM is based on a highly automated, web-based software and is characterised by a high level of user-friendliness with regard to the social dimensions of Web 2.0. PFM applications automatically categorise transactions from customer accounts and credit cards, present this information visually and allow the user to monitor, manage and control his or her finances with the help of intuitive tools. Training videos are often available to users, to explain the first steps of the application possibilities (see e.g., Meniga 2013).

Well-known providers include the American company Mint ( and Meniga ( They support the customer with, for example, a highly precise, automatic categorisation of transactions, a possible budget overview for spouses or partners and account consolidation. The systems learns with each use and therefore improves constantly. This soon rewards the initial time investment required for PFM.

Furthermore, PFM provides customers with the opportunity to inform and prepare themselves prior to or after a consultation with an advisor, or indeed to manage completely without the help of an advisor. This technological “upgrade” in the area of self-advice, which is relatively easy to achieve—though certainly nowhere near completely adopted by all customers as yet—threatens to present banks with similar changes as those faced in the past by travel agencies or bookshops. It is not necessary to be an expert or a visionary to recognise the future of online banking. Supplemented by mobile applications on smartphones, PFM can become the focal point of personal financial management: always in the customer's pocket, accessible with only a few fingertips, and at the technological level of the best bank IT.

One special feature—and a clear competitive advantage over classic online banking—is the possibility to compare one's own financial conduct (e.g., spending behaviour) anonymously with others (peers) with similar behavioural patterns. Recommendations from the same reference group (similar lifestyle, same financial situation, etc.) are particularly decisive factors when opting to purchase. From the banks' perspective PFM extends the classic value chain with information about one's own user behaviour and with the possibility to glean even more information in this regard. The necessary data is usually available. One of the first major providers in Switzerland was PostFinance with its “Cockpit”. The Cockpit offers private customers an automatic categorisation of their income and spending, the creation of budgets and savings goals, and notification whenever budget goals have been reached or exceeded (PostFinance 2013). By now most main providers have caught up. PFM is also offered by digital banks in the context of their customer care (see e.g., Fidor Bank, or Banksimple, As well as the direct offer as a platform in itself, “white label” solutions are now also being offered for European banks. Meniga, a well-known provider, refers explicitly to the additional benefits of PFM tools: a demonstrable increase in customer loyalty and the growth and optimisation of cross-selling with individual products and recommendations by using the information obtained (Meniga 2013).

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